 "Mkts rebound on RBI liquidity steps; Benchmarks break two-day losing streak")
Benchmark indices Nifty 50 and Sensex ended the two-day losing streak on Tuesday as banking stocks rallied on the back of Reserve Bank of India (RBI)’s liquidity-boosting measures.
The Sensex ended the session at 75,901, with a gain of 535 points, or 0.7 per cent. The Nifty 50 index closed at 22,957, with a gain of 128 points, or 0.6 per cent. The indices had rallied up to 1.5 per cent intra-day.
The RBI on Monday announced a three-pronged measure to address tight liquidity conditions in the banking system, spurring hopes of a potential rate cut in February.
“RBI’s injection of Rs 60,000 crore of liquidity is a strong statement of intent, even though it covers only 20 per cent of the existing shortage of Rs 2.9 trillion. A turn in the liquidity cycle is a strong stimulant for domestic equities, and BFSI (banking, financial services, and insurance) is the best way to play this in the short term. This is coupled with other positives — earnings forecasts have held up through January 2025 and valuations are now more reasonable,” Emkay Global Financial Services said in a note.
Bajaj Finance, Axis Bank, Bajaj Finserv, and HDFC Bank were among the top gainers in Nifty 50 and Sensex on Tuesday.
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Bluechip shares rallied despite foreign portfolio investors (FPIs) continuing to sell domestic stocks. According to provisional data from exchanges, FIIs (foreign institutional investors) sold another Rs 4,920 crore worth of stocks to take the total outflow this month to Rs 71,105 crore.
The broader markets, however, continued to witness selling pressure, with the Nifty Midcap100 declining 0.5 per cent, while the Nifty Smallcap 100 fell 1.8 per cent. The two indices are now down over 15 per cent from their peaks.
However, the factors that have been driving the market lower in recent weeks, like uncertainty over US President Donald Trump's trade policies and the potential impact of Chinese ChatGPT rival DeepSeek, remain an overhang.
Shares of AI-driven electronics manufacturing services (EMS) firms like Dixon Technologies, Kaynes Technology, Netweb Technologies, and MIC Electronics tumbled up to 10 per cent.
Among the sectors, pharmaceuticals was the worst hit. Nifty Pharma closed in the red for the third consecutive session with a 2.3 per cent fall on Tuesday.
Analysts expect the market to remain range-bound this week. "Investors will be tracking the quarterly numbers and future guidance from some of the key companies like Bajaj Finance, Maruti Suzuki, Tata Motors, Adani Power, amongst others, (which are) announcing results on Wednesday. We expect the market to trade in a range-bound manner, ahead of the US Fed interest rate decision on Thursday and the Union Budget announcement on Saturday," said Siddhartha Khemka, head-research, wealth management, Motilal Oswal Financial Services.
Even after the latest rebound, the benchmark Nifty is down 2.9 per cent so far this month. This will be the benchmark index’s fourth straight monthly loss — longest monthly losing streak in 23 years, as per Reuters.