Benchmarks indices on Tuesday rebounded amidst buying in heavyweights such as ICICI Bank and Reliance Industries (RIL). The sentiment was boosted by easing of domestic inflation and India’s growing weightage in the MSCI global indices.
The Sensex ended at 71,555, gaining 483 points, or 0.7 per cent while the Nifty ended at 21,743, with a gain of 127 points or 0.6 per cent. Smallcaps also noticed a stabilisation after a two-day fall, but continued to underperform the benchmarks.
The Nifty Smallcap 100 index rose 0.17 per cent and the Nifty Midcap 100 gained 0.34 per cent. The BSE PSU index rose 1.24 per cent with shares of IRFC and NLC India gaining over 13 per cent each. NBCC, MMTC, and SAIL declined over 4 per cent each.
“The domestic market largely recovered from yesterday’s losses, driven by gains in the banking sector. Improved sentiment stemmed from a decline in the domestic inflation, which is expected to boost rural demand,” said Vinod Nair, head of research at Geojit Financial Services.
ICICI Bank, which rose 2.5 per cent, contributed most to the Sensex gains, followed by RIL, which gained 0.9 per cent. Axis Bank and Kotak Mahindra Bank, which gained 2.3 per cent and 1.6 per cent respectively, were the other big contributors to index gains.
Investors also cheered the decrease in consumer price inflation (CPI), which dropped to a three-month low of 5.10 per cent in January. Food inflation rose 8.3 per cent as against 9.5 per cent in December. Food inflation accounts for more than half of the inflation basket.
However, the market breadth remained unfavourable, with 2,172 stocks declining and 1,685 advancing on the BSE.
“The recent price action in the index shows indecisiveness among the participants. Thus, traders should continue with a stock-specific approach and wait for clarity. Besides, we suggest utilising further rebound to reduce longs, especially in the PSUs and other overbought sectors or themes,” Ajit Mishra, SVP of technical research at Religare Broking said.