Indian stock market surged on Tuesday, with Sensex and Nifty extending gains for the third consecutive day after a sharp rally pushed the benchmark indices 3% higher over the past two sessions amid optimism around the Iran-US peace deal framework.
Sensex gained over 250 points to trade at 76,550 level, while Nifty 50 gained over 50 points to trade above 23,900 mark on Tuesday. This came as India VIX, which measures volatility in the market, dropped 2.5% to 14.35.
HCL Tech shares were the top gainers on Sensex, jumping 3%. Tech Mahindra, Adani Ports, SBI, Eternal, IndiGo, L&T, Hindustan Unilever, Infosys, HDFC Bank and TCS shares followed, rising around 1% each. Bucking the trend, Axis Bank and Bajaj Finance shares fell 0.5% each to lead losses on the benchmark index.
Broader markets also accompanied benchmark indices, rising nearly 0.4% each. Sectorally, Nifty Realty, Nifty IT and Nifty Auto gained nearly 1%, while Nifty Metal fell around 1%. Around 1,813 stocks advanced on NSE, while 515 declined and 112 remained unchanged.
What lies ahead?
The sharp correction in Brent crude to below $84 and stability in the rupee have the potential to impart resilience to the market, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments. “The strong macro headwind of rising BoP deficit is no longer a serious issue plaguing the economy. This positive development, in turn, has imparted stability to the rupee, which has appreciated to 94.71 to the dollar from the recent low of 96.96. In this macro backdrop, the sustained FII selling, which has been weighing on the market, is likely to taper going forward,” he added.
But the renewed strength in the AI trade and the momentum in markets like South Korea and Taiwan are likely to keep FIIs away from India for some time, he cautioned, adding that valuations in India do not warrant a sustained rally in the market. “A concern in the market now is the poor monsoon so far and whether a below-normal monsoon might trigger inflation. We will have to wait and watch developments on the monsoon front,” Vijayakumar said.
“Going forward, investors will closely track the formal signing of the US-Iran agreement scheduled on June 19, crude oil price trends, FII flow dynamics and evolving inflation expectations for further market direction,” he added.
