Expecting the Reserve Bank of India (RBI) to maintain its accommodative stance and hold key interest rates tomorrow, the stock market rebounded on Tuesday after two consecutive sessions of heavy losses. The Sensex gained 886 points to close at 57,633. The Nifty index rose by 264 points at 17,176.

The sentiments also got a boost as concerns around the Omicron variant of the coronavirus seem to be wearing off.

Positive global cues

There is an ongoing fight between the bears and the bulls in the stock market, which is seen in daily swings of more than 1 per cent in the benchmark indices. But the positive global sentiment, especially the sharp gains of the past two days in the US markets, has been weighing in the favour of the bulls.

Vinod Nair, Head of Research at Geojit Financial Services, said, “Global markets traded with optimism on reports that the Omicron strain may not be as severe as expected. Moreover, additional liquidity freed up by the Chinese central bank through policy easing boosted the Chinese markets. In the Indian markets, banking and financial stocks advanced since the MPC is scheduled to announce its policy decision tomorrow where the RBI is likely to keep its policies unchanged considering the short-term uncertainties.”

Bank stocks rally

A rally in banking stocks also helped the markets gain sharply. The Bank Nifty index rose by 2.47 per cent or 882 points to close at 36,618. India’s low interest rate regime is being perceived as a golden period for the banks in recent times, since they are likely to attract more business.

“We are changing the market status to a confirmed uptrend as Nifty managed to stage a follow-through day. Nifty moved higher with volumes higher than yesterday’s session. Going forward, confidence in the rally will increase once leading stocks reclaim their key moving averages,” said a report from William O Neil India, a technical analysis firm.

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