Domestic equity benchmarks, Sensex and Nifty, opened higher on Tuesday, supported by improved domestic sentiment and mixed global cues.
Investor mood brightened after retail inflation eased to an eight-year low of 1.54 per cent in September, driven by a 2.3 per cent year-on-year decline in food prices.
At 9:17 am, the BSE Sensex gained 215.98 points, or 0.26 per cent, at 82,543.03 after rising nearly 246 points in early trade. The NSE Nifty edged higher by 66.25 points, or 0.26 per cent, to 25,293.60, after hitting a day’s high of 25,306.30.
Among Sensex stocks, HCL Technologies led the gainers, rising 1.96 per cent to Rs 1,524.05. Tata Steel shares gained 1.50 per cent, while Tech Mahindra, Infosys and Eternal rose 1.24 per cent, 0.86 per cent and 0.66 per cent, respectively.
Wall Street closed higher overnight, with all three major US indices ending in the green. The Dow Jones Industrial Average rose 1.29 per cent to 46,067.58, the S&P 500 climbed 1.56 per cent to 6,654.72, and the Nasdaq Composite was 2.21 per cent higher to 22,694.61.
Asian markets were mixed in Tuesday’s trade, with Japan and Hong Kong in the red while South Korea bucked the trend. Japan’s Nikkei 225 slipped 1.18 per cent to 47,520.57, and Hong Kong’s Hang Seng Index declined 0.48 per cent to 25,765.77. In contrast, South Korea’s KOSPI edged 0.68 per cent higher to 3,608.93.
On Monday, the Sensex slipped 173.77 points, or 0.21 per cent, to close at 82,327.05, while the Nifty50 declined 58 points, or 0.23 per cent, to end the day at 25,227.35.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said a key takeaway from the past year’s market performance is the clear divergence between large and small-cap stocks – with the Nifty rising 1.05 per cent, while the Nifty Smallcap index slipped 4.77 per cent.
“Equally significant is the outperformance of PSU banks ( Nifty PSU bank index up by 16.77 per cent) and the huge underperformance of IT ( Nifty IT down by 16.5 per cent). One common feature in these trends is the valuation. IT stocks, particularly the largecaps, are viewed as overvalued by the market since they are facing many headwinds and some strong structural issues,” Vijayakumar said.
“On the other hand PSU stocks have been trading at very low valuations despite decent growth and robust balance sheets. This anomaly in valuations have been corrected by the market. This trend is likely to continue. However, in growth stocks like digital companies and renewable energy, their long-term growth potential will continue to attract investment despite high valuations,” Vijayakumar added.