Indian benchmark indices - BSE Sensex and NSE Nifty - resumed its northward journey after two sessions of profit booking on Monday, driven by improved global sentiment and easing U.S.-China trade tensions. Softer-than-expected U.S. inflation data reinforced expectations of another 50 basis points (bps) rate cut by the U.S. Federal Reserve before the year-end, fuelling risk-on sentiment across global equities.

The Sensex climbed 567 points, or 0.67%, to close at 84,779, while the Nifty50 advanced 171 points, or 0.66%, to settle at 25,966.

“Softer-than-expected U.S. CPI data fueled expectations of a potential Fed rate cut this week, bolstering investor sentiment. Meanwhile, optimism over progress in U.S.-China trade talks further supported a broad-based market rebound,” Bajaj Broking said in a note.

Outperforming the benchmark indices, the broader market ended on a solid note. The Nifty Midcap 100 gained 0.93% and the Nifty Smallcap 100 added 0.82%.

The market breadth was broadly positive, with strong buying seen across PSU bank, oil & gas, and realty stocks. Out of 4,502 stocks traded on the BSE, 2,178 advanced, 2,114 declined, and 210 remained unchanged.

Among individual stocks, Bharti Airtel, Reliance Industries, Eternal (Zomato) and State Bank of India were among top performers, rising up to 2.5%. Among others, tata group stocks Tata Motors and Tata Steel added 1.6% and 1.2%, respectively.

In contrast, Kotak Mahindra Bank, BEL, Infosys, Adani Ports, and Bajaj Finance were among top five losers, falling in the range of 1.7% to 0.7%.

Sectorally, apart from Nifty Media and Pharma, all major indices closed in the green. PSU Bank, Realty, Metal, and Oil & Gas indices rose over 1% each, underscoring the day’s bullish undertone.

“The benchmark index Nifty ended on a positive note after two consecutive sessions of profit booking, signalling a return of bullish momentum. On the daily chart, the index has formed a bullish candle with a minor upper shadow, indicating sustained buying interest at lower levels,” said Sudeep Shah, Head - Technical Research and Derivatives at SBI Securities.

With the Q2 earnings season in full swing, markets are likely to witness sector and stock-specific movements in reaction to the result announcements and management updates, said Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services

Key results on Tuesday include TVS Motor, Tata Capital, Jindal Steel, CAMS amongst others. “Overall, we expect the market to witness a gradual up-move on the back of strong global cues, renewed FII buying and expectation of healthy corporate earnings,” he added.

Vinod Nair, Head of Research, Geojit Investments, said that easing  global headwinds, coupled with strong domestic reforms, provided cues for domestic earnings growth and justified the current premium valuations.

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