Mumbai: Indian equities extended their recovery on Tuesday, with benchmark indices ending sharply higher as investors stepped up purchases in pharma, private banking and oil and gas counters ahead of the Reserve Bank of India’s monetary policy outcome.
The Sensex rallied 685.34 points, or 0.95 percent, to settle at 73,067.81. The Nifty gained 220.35 points, or 0.98 percent, to close at 22,776.10, reclaiming the crucial 22,750 level.
Buying in heavyweight stocks kept sentiment buoyant through the session, while investors positioned themselves ahead of the RBI announcement for signals on interest rates, liquidity and the central bank’s assessment of inflation and economic growth.
What Drove The Rally?
Pharma, chemicals, private banks and oil and gas stocks provided the principal thrust to Tuesday’s advance. Trent, BSE and Kotak Mahindra Bank were among the top Nifty gainers and supported the benchmark’s recovery.
Broader markets also participated strongly. The Nifty MidCap index advanced 1.08 percent, while the Nifty SmallCap index outperformed with a 1.56 percent gain, indicating that buying was not restricted to index heavyweights.
Sectorally, the Nifty Pharma index emerged as the strongest performer, followed by the Nifty Chemical index. Information technology stocks, however, witnessed profit-taking, leaving the Nifty IT index as the biggest sectoral laggard.
A decline in crude oil prices also offered support to domestic equities, easing some concerns over inflation and India’s external balances.
What Do Technicals Indicate?
The Nifty’s recovery has improved its near-term technical structure, although analysts believe the index needs to decisively clear 22,800 to strengthen the rebound.
A sustained move above 22,800 could pave the way towards the psychologically important 23,000 level. On the downside, immediate support is seen around 22,600, followed by 22,500.
Momentum indicators are also showing early signs of improvement. The Relative Strength Index has moved into the mid-30s, indicating a gradual recovery in momentum.
Meanwhile, the MACD histogram has eased further from negative territory, suggesting that bearish momentum and selling pressure are moderating.
What Should Investors Watch?
The immediate trigger remains the RBI policy outcome, with investors watching closely for the central bank’s decision on the repo rate and its commentary on inflation, growth and liquidity conditions.
Analysts said the near-term market bias remains cautiously constructive following the second consecutive session of recovery.
However, despite improving domestic sentiment and softer crude prices, global uncertainties remain a key risk. The sustainability of the rebound could therefore depend on the RBI’s policy signals and whether the Nifty can establish itself firmly above 22,800.
