Market Wrap

Indian equities extended their recovery on Tuesday, with the Nifty 50 rising 0.98% to 22,776.10 and the Sensex gaining 0.95% to 73,067.81, as buying broadened across the market following the recent eight-week losing streak. The rally was supported by strong participation, with 14 of 16 major sectoral indices closing higher, while mid- and small-cap stocks also joined the recovery.

Financial stocks led the gains, supported by encouraging quarterly business updates from lenders, while chemical stocks also outperformed, with Deepak Fertilisers and Deepak Nitrite among the notable gainers.

Global cues provided an additional boost. The S&P 500 and Nasdaq reached fresh record highs, supported by easing U.S. Treasury yields, optimism around AI-driven growth and expectations of a less aggressive Federal Reserve. Softer U.S. labour-market data has reduced expectations of near-term monetary tightening, improving the backdrop for emerging-market equities.

Commodity markets also turned more supportive for India, with Brent crude falling below $100 as Middle Eastern supply recovered and the G7 moved toward releasing emergency oil reserves. Lower crude prices could ease India's import bill, inflationary pressures and pressure on the rupee, although geopolitical developments remain an important risk.

Despite the stronger market performance, institutional flows remain a concern. FIIs continued to sell Indian equities, offloading around ₹4,699 crore, while DIIs bought approximately ₹5,182 crore. The rupee also weakened to around ₹96.42 per dollar, while renewed uncertainty surrounding India-U.S. trade negotiations added another layer of risk.

What's Ahead

The RBI monetary policy decision on Wednesday is now the key catalyst for the market. With expectations centred around a 25-basis-point rate hike, the market's reaction will depend heavily on the RBI's guidance on inflation, liquidity and the future policy path. A measured decision accompanied by balanced guidance could reinforce the ongoing rebound, particularly across financials, domestic cyclicals and selected midcaps.

Technically, the 22,800–22,850 zone will be an important near-term hurdle for the Nifty. A sustained move above this region could strengthen the recovery and improve investor confidence, while failure to break higher could result in consolidation or renewed profit booking.

Beyond the RBI decision, investors will monitor crude oil, the rupee, FII flows, U.S. Treasury yields and India-U.S. trade negotiations. The earnings season will also begin to gain importance, with TCS scheduled to report on October 8, providing an early indication of September-quarter earnings momentum and potentially influencing the outlook for the underperforming IT sector.

Overall, the technical setup has improved meaningfully, but the durability of the rebound will depend on whether macro conditions and institutional flows begin to turn supportive rather than merely reflecting short-covering after the recent correction.

Market Snapshots

Institutional Activity

Sectoral Performance

Technical Outlook

Nifty 50

The NIFTY 50 gained 133.80 points, or 0.60%, to close at 22,555.75, extending its recovery as broad-based buying and softer crude prices improved sentiment. The index recovered from an intraday low of 22,397.10 and market breadth remained positive, with 31 stocks advancing against 18 declining. However, the RSI remains near the 30 level, indicating that momentum is still weak despite the rebound and that the index remains close to oversold territory. Immediate support is placed at 22,231 and 22,030, while 22,880 and 23,081 remain the key resistance levels. A sustained move above 22,880 would strengthen the recovery, while failure to hold 22,231 could bring renewed selling pressure.

BankNifty

The NIFTY BANK advanced 263.35 points, or 0.48%, to 54,714.10, supported by broad-based buying across banking constituents, with 11 stocks advancing against only 3 declining. The index recovered from its intraday low of 54,370.60 after initially weakening during the session, indicating some buying interest at lower levels. The RSI has moved toward 40, suggesting a gradual improvement in momentum, although the index remains below its key resistance zone. Immediate support stands at 53,956 and 53,488, while resistance is positioned at 55,472 and 55,941. Sustaining above 55,472 could reinforce the recovery, whereas a move below 53,956 would weaken the near-term setup.

NIFTY FINANCIAL SERVICES

The NIFTY Financial Services index gained 100.30 points, or 0.41%, to 24,656.40, with broad-based buying across several financial stocks and market breadth remaining favourable at 13 gainers against 7 decliners. Gains in BSE, Shriram Finance, REC, ICICI Lombard and Bajaj Finance helped offset weakness in MFSL and HDFC Bank. The index is showing signs of stabilization after the recent decline, but remains below its immediate resistance levels. 24,333 and 24,133 are the key support levels, while 24,980 and 25,180 represent the major resistance zones. A sustained move above 24,980 would improve the technical structure, while a break below 24,333 could revive selling pressure.

Sensex

The BSE Sensex rose 472.77 points, or 0.66%, to close at 72,382.47, supported by gains across major constituents and positive market breadth, with 20 stocks advancing against 10 declining. ITC, Eternal, Bharti Airtel, Bajaj Finance and Adani Ports were among the key contributors, although weakness in HCL Technologies and HDFC Bank limited the upside. The index has shown improved buying interest following its recent correction, but confirmation of a stronger recovery will depend on its ability to clear the immediate resistance zone. 71,405 and 70,800 remain the key support levels, while 73,360 and 73,965 are the immediate resistance levels. Holding above 71,405 keeps the recovery structure intact, while a sustained move above 73,360 could strengthen the positive momentum.