Indian stock markets witnessed a spirited recovery on Tuesday. Equity benchmarks Sensex and Nifty shrugged off recent volatility to end significantly higher. The catalyst for this sudden surge was the announcement of a historic Free Trade Agreement (FTA) between India and the European Union. Investors cheered the deal which promises to open vast new markets for Indian exporters.
The 30-share BSE Sensex climbed 319.78 points to reclaim the 81,000 mark comfortably. It settled at 81,857.48 points marking a 0.39 percent rise. Broader markets followed suit with the Nifty 50 surging 126.75 points to close at 25,175.40. Financial and metal stocks led the charge while technology shares also saw robust buying interest.
Banking and Metal Stocks Lead the Charge
Buying action was concentrated heavily in the banking and metal sectors. These industries are expected to benefit most from the new economic landscape. The market mood shifted decisively during the afternoon session.
Top Gainers on Tuesday:
- Axis Bank
- Adani Ports
- Tata Steel
- Tech Mahindra
- NTPC
- State Bank of India
- UltraTech Cement
- Bharat Electronics
Axis Bank emerged as the star performer among Sensex constituents. The private lender’s stock jumped over 4 percent during the day. This rally followed its impressive third-quarter earnings report.
The bank reported a solid 4 percent growth in net profit for the December quarter. Profit figures stood at ₹7,010.65 crore compared to ₹6,742.99 crore in the same period last year. Investors reacted positively to the healthy balance sheet growth and improved asset quality.
Tata Steel and other metal stocks also rallied. The optimism stems from expectations of easier access to European markets under the new trade pact. Lower tariffs on steel and aluminum exports to Europe could significantly boost margins for these heavyweights.
Historic India-EU Trade Deal Boosts Sentiment
The biggest trigger for the market bounce was undoubtedly the geopolitical breakthrough. India and Europe officially sealed what officials are calling the “mother of all deals” on Tuesday. This ambitious Free Trade Agreement comes at a critical time for the global economy.
Global trade has faced severe disruptions recently. Much of this instability has been linked to aggressive tariff policies from Washington. The India-EU pact is seen as a strategic counter-move to ensure stability. It aims to bypass protectionist barriers and foster smoother supply chains between the two economic giants.
“This agreement is a game-changer. It provides Indian companies with duty-free access to one of the world’s largest consumer markets at a time when other avenues are closing,” said a senior market analyst based in Mumbai.
Traders believe this deal will particularly help sectors like textiles, leather, and automobiles. The removal of trade hurdles is expected to increase export volumes significantly over the next fiscal year. This long-term clarity gave investors the confidence to buy into the dip despite the volatile start to the week.
Rupee Bounces Back from Record Lows
The positive sentiment was not limited to equities. The Indian Rupee also staged a smart recovery against the US Dollar. The domestic currency had been under immense pressure in recent weeks due to global dollar strength.
On Tuesday the Rupee recovered 19 paise to close at 91.71 against the greenback. While 91.71 is still historically low compared to previous years it marks a significant rebound from the all-time low hit earlier in the session.
Foreign fund inflows are expected to pick up following the FTA announcement. This anticipation helped support the local currency. Forex dealers noted that the Reserve Bank of India also likely intervened to smooth out volatility. A stronger Rupee typically helps reduce the import bill for oil and other commodities.
Laggards and Sectoral Performance
Not every sector joined the party. Some heavyweights faced selling pressure as investors churned their portfolios. Profit booking was visible in consumer goods and select auto stocks.
Key Laggards included:
- Mahindra & Mahindra
- Kotak Mahindra Bank
- Asian Paints
- ITC
Mahindra & Mahindra dipped as traders evaluated the impact of European car imports on the domestic market. Asian Paints struggled due to concerns over rising crude oil prices which affect raw material costs.
Despite these pockets of weakness the overall market breadth remained positive. Mid-cap and Small-cap indices also saw healthy gains. This indicates that the rally was broad-based and not just limited to large-cap stocks.
The session was highly volatile. The Sensex swung between a high of 82,084.92 and a low of 81,088.59. However the strong close suggests that bulls are back in control. The market now looks forward to the implementation details of the trade pact.
Investors will be watching global cues closely in the coming days. The focus will remain on how quickly the benefits of the India-EU FTA translate into corporate earnings. For now the mood on Dalal Street is one of cautious optimism and relief.
