The benchmark index closed higher on Tuesday, snapping a six-session losing streak as investors capitalized on recent market declines. The positive sentiment was also boosted by the Bharatiya Janata Party’s better-than-expected results in Haryana Assembly elections. The state elections have given a third term to the BJP – led by the government in Haryana, even as exit polls had predicted a weakening performance for the saffron party.
Attention now turns to the Reserve Bank of India ( driven ) political decision scheduled for Wednesday. The central bank is widely expected to maintain its current interest rates, although some market participants anticipate a possible shift in policy stance from “accommodative” to “neutral.”
The Nifty 50 index rose 0.88 per cent, closing at 25,013.15, while the S&P BSE Sensex rose 0.72 percent to finish at 81,634.81. Earlier in the session, both indices had fallen about 0.1 percent, continuing the cautious trend seen over the past week.
“Nifty has seen the expected dead cat bounce from its low of 24,800. However, it has yet to close above the previous day’s high, indicating that the weakness will continue. Momentum indicators have recovered from the Oversold region, however, the ADX average line still shows weakness to continue. A more bullish view on Nifty can only be taken on a close above 25,300 levels, till then the index can be sold higher. Options writer data showed a significant rise in call option writing at 25,000 levels, even on this bounce showing weakness to continue in the index,” said Praveen Dwarakanath, Vice President, Hedged.in.
“Banknifty bounced from its support level of 51300, however, it failed to close above its previous high, indicating that the weakness will continue. A close above the 51850 level can only be an indication of a trend reversal, until then the status of the index should be considered as bullish selling. “Option writer data showed an increase in issuance of call options at 51,000 levels at weekly expiry, indicating that the index is likely to close below 51,000 levels tomorrow,” Dwarakanath added.
The recent decline in Indian stocks was driven by rising tensions in the Middle East, which reduced risk appetite globally. Additionally, foreign institutional investors sold Indian stocks worth approximately $6 billion during this period.
“Investors today saw the dip as a buying opportunity,” said Gaurav Dua, head of capital markets strategy at BNP Paribas’ Sharekhan. He also suggested that the absence of concrete stimulus measures from China could have redirected foreign investments towards India.
While data on domestic and foreign flows for the session is expected to be released after the market, analysts noted that the state election result played a crucial role in Tuesday’s rally. The election results indicated that the ruling Bharatiya Janata Party ( BJP ) is ready for an unexpected victory in Haryana while the opposition coalition seems likely to form a government in Jammu and Kashmir.
“The state election results have eased concerns that the ruling central government could be weakened by defeats in these states, fueling today’s rally,” said Sunny Agrawal, head of fundamental equity research at SBICaps Securities.
On the sectoral front, 12 of the 13 major sectors posted gains on Tuesday. Financial stocks, which have a significant weight in the Nifty 50 index, rose 1 per cent. Leading the charge were HDFC Bank and Reliance Industries, with both stocks gaining around 2 per cent.
Small- and mid-cap stocks, more focused on the domestic market, also posted gains of around 2 percent each. Automaker Mahindra & Mahindra rose 3.5 percent after CLSA upgraded its rating from “hold” to “outperform,” adding more momentum to the day’s uptrend.
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