Sensex, Nifty rebound after two-day decline; banks lead broad-based rally

Indian equity benchmarks rebounded on Tuesday after two consecutive sessions of losses, with strong buying in banking and financial stocks helping the market recover from Monday's sharp sell-off. Broader markets outperformed the frontline indices, signalling a return of risk appetite among investors.

The Sensex ended 394.50 points, or 0.54%, higher at 73,918.76, while the Nifty 50 gained 119.10 points, or 0.52%, to close at 23,242.10.

Financials drive market higher

Banking and financial stocks emerged as the biggest contributors to the rally, with the Nifty PSU Bank index surging 3.62%, making it the top-performing sectoral gauge of the day. The Nifty Bank index advanced 2.09%, while Nifty Private Bank and Nifty Financial Services gained 1.64% and 1.40%, respectively.

Among the benchmark constituents, State Bank of India climbed 2.26%, while Axis Bank and ICICI Bank gained more than 2% each. Bajaj Finance added 1.81%, further supporting the upmove in financial stocks.

The strength in lenders came amid improved sentiment following recent liquidity-supportive measures announced by the Reserve Bank of India and easing concerns over global risk factors.

Broader markets outshine benchmarks

The rally was not confined to large-cap stocks. Broader market indices outperformed the benchmarks, indicating wider participation in the day's gains.

The Nifty Smallcap 100 rose 1.69%, the Nifty Midcap 100 advanced 1.35%, and the Nifty Microcap 250 gained 1.86%. Market volatility also eased, with India VIX declining sharply by 8.53%, reflecting reduced investor anxiety after the previous session's turmoil.

Auto, realty advance; IT and media lag

Sectorally, all major indices ended in positive territory except IT and Media.

The Nifty Auto index gained 1.34%, aided by a 1.60% rise in Maruti Suzuki. Realty stocks also witnessed healthy buying interest, with the Nifty Realty index climbing 1.63%.

Defensive segments remained supportive, with FMCG and Pharma indices gaining 0.73% and 0.59%, respectively.

However, technology stocks continued to face selling pressure. The Nifty IT index fell 0.48%, dragged by losses in Infosys, TCS, HCLTech and Tech Mahindra. The Nifty Media index was the only other sectoral loser, slipping 0.15%.

InterGlobe Aviation (IndiGo) emerged as the top gainer on the Nifty 50, rallying 3.95%. Jio Financial Services rose 2.33%, while SBI, Axis Bank and ICICI Bank gained over 2% each.

On the losing side, Titan declined 2.20%, followed by ONGC, NTPC and Power Grid, which fell between 1.6% and 2%.