The benchmark S&P BSE Sensex and National Stock Exchange Nifty indices rose for a third consecutive day on Tuesday, with gains in Reliance Industries and Larsen & Toubro offsetting losses in banking heavyweights ICICI Bank and Axis Bank, as well as the information technology bellwether Tata Consultancy Services.

The confident tone of three Union ministers on the regime and policy continuity also buoyed sentiment. Meanwhile, global markets traded cautiously ahead of the release of key inflation data in the US, which could set the tone for the rate-easing trajectory by the Federal Reserve.

The Sensex rose 329 points, or 0.45 per cent, to end at 73,104.6, while the Nifty 50 rose 114 points, or 0.51 per cent, to finish at 22,218. This marked the biggest single-day gain for both indices since April 29.

The India Vix (volatility index) fell nearly 2 per cent to close at 20.2. The fear gauge had more than doubled from 10.2 to 20.6 in the preceding 13 trading sessions amid concerns over the margin of victory of the incumbent Narendra Modi government.

Finance Minister Nirmala Sitharaman said on Tuesday, “There is absolutely no need to worry about the outcome of the election… there is no doubt Prime Minister Modi is coming back and the Bharatiya Janata Party is coming back.”

A day earlier, Union Home Minister Amit Shah and External Affairs Minister S Jaishankar had played down the spike in volatility in the market and said the markets would welcome continuity at the Centre.

Before gaining in the past three sessions, the benchmark Nifty had dropped 3 per cent from its peak following five straight days of losses. The drop in the broader market was even sharper, with the Nifty Smallcap 100 coming off over 6 per cent from its peak.

“The domestic market has sustained its recovery path from recent lows, aided by a moderation in India’s Consumer Price Index (CPI) and favourable signals from its Asian peers. However, investors are cautious ahead of the upcoming US CPI data, which is anticipated to show a slight increase from the previous month and could raise concerns about rate-cut expectations. Volatility and range-bound trading are likely to persist in the near term, given the ongoing uncertainty surrounding the low turnout,” said Vinod Nair, head of research at Geojit Financial Services.

The broader markets outperformed on Tuesday, with the Nifty Smallcap 100 index gaining over 2 per cent, while the Nifty Midcap 100 index gained nearly 1 per cent.

Experts said the Sensex reclaiming 73,000 and the Nifty closing above 22,200 is a positive sign but markets may remain range-bound in the near term.

“The market is playing a wait-and-watch game as the polling season is underway and it’s difficult to predict whether a three-day rally would sustain going ahead, but the Sensex closing above the crucial 73,000 mark holds the key. Surprisingly, investors continue to find value in small and midcap stocks at a time when investors usually keep a low profile during the election season,” said Prashanth Tapse, senior vice-president (research) at Mehta Equities.

The market breadth was strong with 2,665 stocks advancing and 1,145 declining. Two-thirds of Sensex stocks gained. Foreign portfolio investors (FPI) were net sellers worth Rs 4,065 crore and domestic institutions bought shares worth Rs 3,527 crore. FPI selling has neared Rs 30,000 crore ($3.5 billion) this month.

First Published: May 14 2024 | 9:33 PM IST

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