Benchmark equity indices closed higher on Tuesday, led by a rebound in financials, while easing domestic inflation and hopes of an increase in foreign inflows aided sentiment. IT stocks also contributed to the rally, ahead of a key US inflation report that could help shape the Federal Reserve’s rate outlook and determine the timing of interest rate cuts.

The BSE benchmark Sensex rose 483 points or 0.68% to settle at 71,555. The broader NSE Nifty surged 127 points or 0.59% to end at 21,743.

Investor attention this week will be on crucial reports on January’s US Consumer Price Index (CPI), due later in the day, and the Producer Price Index, scheduled to be released on Friday.

From the Sensex pack, ICICI Bank, Axis Bank, Wipro, and Kotak Bank were the top gainers, rising over 2% each. While UltraTech Cement, M&M, Titan, Tata Motors, and Nestle India ended with cuts.

Paytm shares closed in a 10% lower circuit and hit a record low after brokerage Macquarie downgraded the stock, citing “a serious risk of exodus of customers”, after the central bank’s recent clampdown against Paytm’s banking arm.

Hindalco shares also closed over 12% lower after its US-based subsidiary Novelis revised the return guidance for the Bay Minette project to double digits from the previous mid-teens.On the sectoral front, 11 of the 13 major sectors logged gains. Financials, the highest-weighted of the 13 major sectors, gained 1.37% on the day after dropping 1.41% in the previous session. Nifty Bank rose over 1%, led by ICICI Bank, Axis Bank, and SBI. Nifty FMCG, IT, Pharma, Consumer Durables, and Oil & Gas also closed higher. In the broader market, Nifty Midcap100 gained 0.34%, and Nifty Smallcap100 rose 0.17%.Meanwhile, the market capitalisation of all listed companies on BSE surged by Rs 1.93 lakh crore to Rs 380.77 lakh crore. The market breadth was skewed in the favour of the bears. About 2,124 stocks declined, 1,727 gained, and 91 remained unchanged on the BSE.

Expert Views

“The domestic market largely recovered from Monday’s losses, driven by gains in the banking sector. Improved sentiment stemmed from a decline in domestic inflation, which is expected to boost rural demand. Despite this, broader markets continued to underperform compared to frontline indices due to high valuations. However, investors remained cautious ahead of US inflation data, anticipating a moderation, pivotal for the Fed’s interest rate trajectory,” said Vinod Nair, Geojit Financial Services.

Prashanth Tapse, Mehta Equities, said, “Although markets ended in positive territory, it was mainly due to recovery in banking stocks, which were hammered in recent sessions due to mixed earnings in financial space and central banks delaying rate cuts. Volatility is likely to persist as most of the hurdles such as geo-political worries coupled with stretched valuations of local stocks and FII selling will continue to keep investors at bay.”

Global Markets

Japanese shares touched a 34-year peak on Tuesday, while European stocks and S&P 500 futures slipped as investors waited for a US inflation report that could shape Federal Reserve policy.

Europe’s continent-wide Stoxx 600 index slipped 0.33% in early trading, after rising 0.54% on Monday, as investors turned cautious before the US data. Germany’s DAX stock index was 0.72% lower. Futures for the US S&P 500 fell 0.32%, while Nasdaq futures were down 0.4%.

Oil Prices Rises

Oil prices rose on Tuesday as uncertainty over fighting in the Middle East kept markets on the edge, but gains were capped by concerns that central banks will keep interest rates higher for longer to battle inflation, weighing on energy demand.

Brent futures rose 30 cents to $82.30 a barrel. U.S. West Texas Intermediate (WTI) crude gained 31 cents to $77.23 a barrel.

Rupee Ends Flat

The Indian rupee closed unchanged on Tuesday after hovering in a narrow range through the day’s session as traders awaited the release of US inflation data, which may modestly spur the local unit but is not expected to cause sharp moves.

The rupee ended at 83.0025 against the US dollar. The currency hovered between 82.9875 and 83.0250 during the day. The dollar index edged higher to 104.2, while most Asian currencies were rangebound, save for the Thai baht, which was up 0.4%.

(With inputs from agencies)

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