Indian equity benchmark indices staged a vigorous technical rebound on Tuesday, snapping a punishing six-session losing streak as strong value buying by domestic institutional investors and retail traders lifted Dalal Street ahead of the Reserve Bank of India's monetary policy announcement.
The 30-share BSE Sensex surged 584.81 points, or 0.72 percent, to settle at 81,634.81 after touching an intraday high of 81,763.28. Concurrently, the broader 50-share NSE Nifty 50 climbed 217.40 points, or 0.88 percent, to comfortably recapture the psychologically crucial 25,000 threshold and finish at 25,013.15.
Domestic Buying Halts Prolonged FII-Driven Selloff on Dalal Street
The sharp recovery provided much-needed relief to investors following a grueling week of foreign institutional investor (FII) outflows triggered by geopolitical turmoil in the Middle East and asset reallocation toward stimulus-boosted Chinese equities that had wiped out trillions of rupees in market capitalization.
Market heavyweights led the turnaround, with private banking giants HDFC Bank, ICICI Bank, and Kotak Mahindra Bank logging notable gains alongside automobile leaders Tata Motors and Mahindra & Mahindra, as market participants anticipated a potential easing of lending conditions.
“After days of intense foreign institutional selling, domestic institutional support and optimistic expectations around monetary policy stance helped market benchmarks stage a decisive technical rebound.” — Prashanth Tapse, Senior Vice President of Research at Mehta Equities
Rate Sensitivity and Shift Toward Neutral Policy Stance in Focus
Economists and market analysts widely anticipate that while the RBI's Monetary Policy Committee (MPC) will keep the benchmark repo rate unchanged at 6.5 percent on Wednesday, Governor Shaktikanta Das could officially change the policy stance from 'withdrawal of accommodation' to 'neutral'.
Broad-based participation was reflected across broader markets, with the BSE MidCap index gaining 1.07 percent and the SmallCap gauge rallying nearly 2 percent, signaling renewed risk appetite among traders entering the festive earnings season.
Frequently Asked Questions
Why did the Sensex and Nifty rebound on Tuesday?
A technical rebound driven by value buying in banking and auto stocks and optimism ahead of the RBI's policy meeting halted six days of losses.
What are market expectations from the RBI monetary policy meeting?
Markets expect the repo rate to remain unchanged at 6.5 percent, but anticipate a shift in the policy stance to 'neutral'.
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