Benchmark equity indices surged nearly 1.6% on Tuesday to close at their highest levels in two months, extending their winning streak to four sessions as falling crude oil prices and renewed foreign investor buying fuelled a rally in large-cap stocks.
The Sensex jumped 1,225.10 points, or 1.62%, to close at 76,917.88, while the Nifty gained 370.05 points, or 1.58%, to settle at 23,810.85. Both benchmarks outperformed major Asian markets on Tuesday.
The rally has gathered momentum over the past four sessions, with the Sensex climbing 5.01% and the Nifty 4.90%. Investors’ wealth swelled by Rs 14.2 lakh crore during this period, including Rs 4.53 lakh crore on Tuesday alone.
A sharp retreat in crude oil prices has been key. Brent crude has fallen by $13 a barrel from its recent peak of $118, easing concerns over inflation and India’s import bill.
Adding to the momentum, foreign portfolio investors (FPIs) appear to be returning to Indian equities after a prolonged selling spree. They purchased shares worth Rs 32,317 crore ($3.4 billion) over the past 11 trading sessions, including Rs 6,837 crore on Tuesday. Domestic institutional investors, meanwhile, sold shares worth Rs 3,678.85 crore on Tuesday, according to provisional exchange data.
Robust second-quarter corporate earnings and below-average valuations could draw more foreign investors to Indian equities, Nomura said in a report cited by Bloomberg.
“We expect relative sentiment towards Indian equities among foreign investors to improve, driving portfolio flows in the near term,” Nomura analyst Saion Mukherjee, wrote in a note.
“Sentiment remained supported by easing crude oil prices, encouraging corporate earnings and signs of renewed foreign investor participation,” said Ajit Mishra, SVP–Research, Religare Broking.
The rally, however, remained concentrated in heavyweight stocks. HDFC Bank, ICICI Bank and Bharti Airtel together contributed 769 points, accounting for nearly 63% of the Sensex’s 1,225-point gain.
Broader markets lagged the benchmarks, with the Nifty Midcap 100 rising 1.06% and the Nifty Smallcap 100 gaining just 0.31%.
Market breadth remained positive, with 2,510 stocks advancing against 1,895 declines on the BSE.
Among sectors, FMCG led the gains with a 3.65% rise, followed by realty, private banks, financial services and automobiles.
Hindustan Unilever, Bharti Airtel, HDFC Bank, Asian Paints and UltraTech Cement were the top Sensex gainers, while Power Grid, SBI, NTPC, Tata Steel and Trent ended among the major laggards.
Despite the sharp rebound, analysts cautioned that the market could face resistance at higher levels.
Mishra said the Nifty could encounter selling pressure in the 23,800–23,900 zone, while the 23,200–23,500 range was likely to provide immediate support in the event of a pullback.