On Tuesday, Indian stock market indices rebounded, ending their two-day losing streak. The Sensex and Nifty 50 closed higher, with the Sensex rising by 535 points, or 0.71 per cent, and the Nifty 50 gaining 128 points, or 0.56 per cent.

The Sensex opened at 75,659, a slight increase from its previous close of 75,366.17, and surged to an intraday high of 76,512.96, before settling at 75,901.41. Similarly, the Nifty 50 started at 22,960.45 and reached 23,137.95, before closing at 22,957.25.

While the large-cap stocks led the market's positive movement, the mid and small-cap segments lagged behind. The BSE Midcap index fell by 0.61 per cent, and the BSE Smallcap index dropped by 1.77 per cent. This underperformance contributed to a slight decline in the overall market capitalization of BSE-listed companies, which fell to Rs 409 lakh crore from Rs 410 lakh crore.

The Nifty Realty index saw a notable rise of over 2 per cent, while the Nifty Bank, PSU Bank, Private Bank, and Financial Services indices all gained close to 2 per cent. The Nifty Auto index also experienced a 1 per cent increase. On the other hand, the Nifty Pharma index saw a drop of over 2 per cent, and the Nifty Media index declined by more than 1 per cent.

Several factors contributed to the market’s positive performance on Tuesday:

1. Strong Performance in Banking Stocks

Major banking stocks played a crucial role in boosting market sentiment. HDFC Bank, ICICI Bank, Axis Bank, and Bajaj Finance were among the top contributors to the Sensex and Nifty 50 gains. The Nifty Bank and Nifty Financial Services indices surged nearly 2 per cent, supported by the Reserve Bank of India’s (RBI) announcement of measures aimed at injecting Rs 1.5 trillion into the economy. This includes the RBI’s plan to purchase government securities worth Rs 60,000 crore in open market operations (OMOs) scheduled for January 30, February 13, and February 20.

2. Market Rebound After Recent Losses

Following two days of losses, experts anticipated a market recovery. The recent decline was seen as an opportunity for investors to purchase high-quality stocks, given India’s long-term economic growth prospects. Analysts noted that despite short-term volatility, the Indian economy’s fundamentals remain strong, with healthy corporate earnings and low foreign institutional investor (FII) holdings.

3. Attractive Valuations of Large-Cap Stocks

The Nifty 50 is currently down 12 per cent from its all-time high, making large-cap stocks more attractive. Experts suggest that the market is now trading at fair valuations, in line with long-term averages, which has sparked selective buying among investors.

4. Pre-Budget Optimism

Investors are focusing on the upcoming Union Budget 2025, which is set to be presented on February 1. There is widespread expectation that the government will introduce measures to support economic growth and boost investor confidence. Analysts predict that the budget will focus on demand revival, private investment incentives, and fiscal prudence.

5. Technical Indicators and Market Sentiment

From a technical perspective, market analysts pointed to key support levels, with the Nifty finding resilience around 22,800. However, the index’s movement below the 23,000 mark reinforced a bearish sentiment. Experts suggest that the market could face challenges if it fails to break above 23,000, but a rally above 23,350 could provide the necessary momentum for further gains.

The Indian stock market is currently navigating a phase of mixed signals, with strong performances in certain sectors like banking and realty, while mid- and small-cap stocks continue to underperform. Investors are closely watching global market trends, economic indicators, and corporate announcements, which are likely to influence market sentiment in the coming days.