Banking stocks drive market gains as Sensex, Nifty gain over 0.7 per cent

A day after registering their worst performance in a month, Benchmark indices on Wednesday rose over 0.7 per cent led by banking stocks as the yield on the 10-year government security (g-sec) fell to its lowest in three years. Global markets traded mixed as investors awaited US President Donald Trump's latest round of tariffs.

 

The Sensex rose 593 points, or 0.78 per cent, to end at 76,617, with HDFC Bank and ICICI Bank accounting for half of the gains. The Nifty 50 index gained 167 points, or 0.72 per cent, to close at 23,332. The broader markets outperformed, with the Nifty Midcap 100 and the Nifty Smallcap 100 indices gaining 1.6 per cent and 1.1 per cent, respectively.

 

 

The Nifty Bank index rose over 1 per cent as the 10-year g-sec yields fell by 10 basis points (bps) to their lowest level since January 2022 after the Reserve Bank of India (RBI) announced ₹80,000 crore ($9.4 billion) of open market operation (OMO) purchases for April.

 

HDFC Bank, which rose 1.7 per cent, and ICICI Bank, which gained 1.1 per cent, were the biggest contributors to Sensex gains.

 

"Buying interest emerged in banking shares following a decline in Indian bond yields after RBI's announcement to purchase ₹80,000 crore worth of bonds in April. Market optimism was also driven by expectations that the tariffs would have a minimal impact on the domestic economy. Further, India's manufacturing PMI for March came to an eight-month high of 58.1, supporting positive market sentiment. Globally, investors are on the edge, awaiting Trump's decision on reciprocal tariffs. Tomorrow (on Thursday), Indian equities are expected to remain volatile as they react to the tariff announcements, taking cues from the initial response of the global markets," said Siddhartha Khemka, head- research, and wealth management of Motilal Oswal Financial Services.

 

The market breadth was strong with 2,818 stocks advancing and 1,133 declining. Close to two-thirds of Sensex stocks gained. Going forward, the fallout from US trade policy and the corporate results of the January-March quarter will determine market trajectory.

 

Foreign portfolio investors (FPIs) were net sellers of ₹1,539 crore while domestic institutions bought shares worth ₹2,809 crore. On Tuesday, FPIs had recorded their biggest single-day selling since February 28, offloading stocks worth ₹5,902 crore.

 

“The scheduled weekly expiry may add to the volatility, apart from news flows. We recommend a cautious stance and favour a hedged approach until there is greater clarity on the indices’ next directional move. However, stocks continue to offer trading opportunities on both sides, and participants should position themselves accordingly,” said Ajit Mishra, SVP-research of Religare Broking.