CHENNAI: Indian equity benchmarks ended Tuesday’s session on a firm note after a volatile and directionless start, as late-session buying helped the market recover from early losses and close in the green. The rebound reflected a mix of selective bargain hunting, stock-specific earnings reactions and optimism around external developments, even as investors remained cautious about the broader near-term outlook.
The BSE Sensex settled higher by over 300 points, while the NSE Nifty 50 finished above the 25,150 level, marking a modest but psychologically important recovery after recent weakness. Both indices had opened lower and slipped further in early trade, mirroring subdued global cues and lingering concerns over foreign portfolio outflows. However, steady buying interest through the afternoon, particularly in heavyweights, enabled the benchmarks to erase losses and edge into positive territory by the close.
Market participants said sentiment improved as investors reacted to a combination of encouraging quarterly results from select companies and renewed hopes surrounding progress on the proposed India-European Union free trade agreement. The prospect of deeper trade and investment ties with the EU has been viewed as a medium-term positive for manufacturing, exports and corporate earnings, lending some support to risk appetite.
"Indian equities continued to trade with a measured and cautious undertone. The finalisation of the India–European Union bilateral trade agreement lent some support to investor sentiment amid a broader risk-off environment triggered by US tariff measures. However, sustained selling by foreign portfolio investors and muted third-quarter corporate earnings growth capped any meaningful upside in domestic equities," said R Ponmudi, CEO at Enrich Money, a SEBI approved online trading and wealth tech firm.
Sectorally, metal, information technology and banking stocks provided the main thrust to the upside. Metal shares benefited from improved global price trends and expectations of steady demand, while IT stocks saw buying interest on the back of relatively stable overseas technology spending signals and currency movements that favour export-oriented companies. In the banking space, select lenders gained on positive earnings reactions and expectations that asset quality trends will remain benign.
The session was marked by sharp intraday swings, underscoring the fragile nature of current market sentiment. Traders pointed out that while Tuesday’s recovery was encouraging, it does not yet signal a decisive shift in trend. The benchmarks have been under pressure through much of January, weighed down by persistent selling by foreign investors, a stronger dollar environment, and uncertainty over global interest rate trajectories. Against this backdrop, the latest bounce is being seen more as a technical pullback than the start of a sustained rally.
Broader market breadth was mixed, with pockets of strength in select mid-cap and small-cap stocks, but overall participation remained cautious. Investors appear to be increasingly selective, favouring companies with visible earnings growth and balance-sheet strength, while avoiding stocks perceived to be vulnerable to margin pressure or global demand slowdowns.
Looking ahead, market direction is likely to be shaped by a combination of domestic and global factors, including the pace of quarterly earnings announcements, developments on the India-EU trade front, and expectations around upcoming policy decisions and the Union Budget. For now, Tuesday’s close suggests that key support levels are being defended, but volatility is expected to remain elevated as investors await clearer cues on growth, policy and global liquidity conditions.