staged a dramatic recovery on Tuesday, shaking off early losses to close near session highs, as optimism over the historic and supportive global cues triggered short covering and renewed buying interest on the monthly derivatives expiry day.
The Nifty 50 gained 126.75 points or 0.51 per cent to close at 25,175.40, while the Sensex rose 319.78 points or 0.39 per cent to settle at 81,857.48. The recovery came after the Nifty plunged to an intraday low of 24,932 in early trade before surging 250 points in the final hour.
“Nifty staged a dramatic intraday reversal, gaining 126 points to close at 25,175 after plunging to test key swing low support level,” said Nandish Shah, Deputy Vice President at HDFC Securities.
“The index opened 15 points up at 25,063, plunged 131 points in the first 15 minutes to 24,932, held that low amid high volatility until 2:30 PM, then surged 250 points in the final hour to an intraday high of 25,246.”
The market’s turnaround was powered by strong buying in metal, banking and PSU banking stocks. Adani Enterprises led the Nifty gainers, surging 5.30 per cent to ₹1,963.00, followed by Axis Bank which jumped 5.09 per cent to ₹1,322.00, and JSW Steel which climbed 4.55 per cent to ₹1,223.20. Adani Ports advanced 4.33 per cent to ₹1,365.00, while Grasim gained 3.66 per cent to ₹2,860.00.
The Nifty Metal index was the star performer, rallying 3.35 per cent, while Nifty PSU Bank surged 1.8 per cent. The Nifty Bank index gained 732.35 points or 1.25 per cent to close at 59,205.45, and Nifty Financial Services rose 236.65 points or 0.88 per cent to 27,058.00.
However, auto stocks bore the brunt of selling pressure following details of the India-EU FTA.
Mahindra & Mahindra tumbled 4.25 per cent to ₹3,392.90, Asian Paints declined 2.80 per cent to ₹2,628.00, and Kotak Mahindra Bank fell 2.58 per cent to ₹411.90.
Max Healthcare dropped 1.64 per cent to ₹975.10, while Maruti Suzuki shed 1.50 per cent to ₹15,237.00. The Nifty Auto index declined 0.9 per cent as the FTA indicated potential reduction in import duties on European cars to around 40 per cent from the current 70-110 per cent.
“The deal will eliminate import duty on 90 per cent of Indian goods after implementation of the free trade agreement, significantly improving price competitiveness of Indian exports in the EU,” said Dr. Ravi Singh, Chief Research Officer at Master Capital Services.
“Import duties on cars will be reduced in phases from as high as 110 per cent to as low as 10 per cent, with tariffs on wine also brought down gradually from 150 per cent to 20 per cent at the lower end.”
Broader markets also participated in the recovery, with the Nifty Midcap 100 advancing 338 points or 0.59 per cent to 57,483.65, and the Nifty Smallcap 100 gaining 66.60 points or 0.41 per cent to 16,419.35. Market breadth remained weak, with 1,803 stocks advancing against 2,510 declining on the BSE, where 4,473 stocks were traded.
“Markets traded with high volatility on the monthly expiry day and eventually managed to close higher, offering some respite after the recent decline,” said Ajit Mishra, SVP Research at Religare Broking. “Early selling pressure was offset by strength in select heavyweight stocks such as Axis Bank following upbeat earnings, which helped improve overall market momentum.”
The Indian rupee strengthened 22 paise to close at 91.92 against the US dollar, supported by a weaker greenback and the landmark India-EU FTA.
“The Indian rupee gained ground as the US dollar weakened and India finalised a historic Free Trade Agreement with the European Union,” said Dilip Parmar, Research Analyst at HDFC Securities. “However, the gains were capped by persistent importer and month end demand for the dollar while capital inflows remain limited.”
Looking ahead, market participants expect volatility to remain elevated ahead of the Union Budget scheduled for February 1.
“We expect markets to remain rangebound tracking global developments and geopolitical cues, while domestically, stock-specific movements are likely to be driven by the ongoing Q3 earnings season,” said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.