Markets rally in early trade amid heavy buying in banking stocks

Mumbai: Equity benchmark indices, Sensex and Nifty began the trade on an optimistic note on Tuesday, mainly due to heavy buying in banking stocks after the Reserve Bank of India announced measures to inject liquidity into the banking system.

The 30-share BSE Sensex climbed 382.53 points or 0.51 per cent to 75,748.70 in the morning trade. The NSE Nifty advanced 55.90 points or 0.24 per cent to 22,885.05.

Among the Sensex shares, Infosys, Axis Bank, ICICI Bank, HDFC Bank, Bajaj Finance, Bajaj Finserv, Zomato, HCL Technologies, IndusInd Bank and Tata Consultancy Services were among the gainers.

Sun Pharmaceuticals, NTPC, PowerGrid, Adani Ports, Mahindra & Mahindra, UltraTech Cement, Reliance Industries and ITC, were among the laggards.

"The Indian market appears to be oversold and is set for a rebound. The RBI's announcement of measures to boost liquidity in the banking system by around Rs 1.5 trillion is positive for the market.

"This raises the prospects of a rate cut by the Monetary Policy Committee (MPC) in the February policy meeting. Banks are likely to benefit," V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

On Monday, the Reserve Bank of India (RBI) said it will purchase government securities worth Rs 60,000 crore in three tranches and announced several other steps to inject liquidity into the banking system.

As part of measures to manage liquidity conditions, the central bank also announced a USD/INR Buy/Sell Swap auction of $5 billion for a tenor of six months to be held on January 31, 2025.

To inject liquidity, RBI said Open Market Operations (OMO) purchase auctions of the government of India securities for an aggregate amount of Rs 60,000 crore in three tranches of Rs 20,000 crore each will be held on January 30, February 13, and February 20.

Besides, a 56-day Variable Rate Repo (VRR) auction for a notified amount of Rs 50,000 crore will be held on February 7.

In Asian markets, Tokyo is trading in the positive territory while Hong Kong is quoting in the green zone. Markets in South Korea and Shanghai were closed for the holidays.

US markets ended lower in overnight deals on Monday.

"The DeepSeek impact on the US stock market in general, and the tech stocks in particular, has turned out to be a reality check for the overvalued stock market. In the medium term this is likely to have a sobering effect on markets, globally, Vijayakumar added.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,015.46 crore on Monday, according to exchange data.

International oil benchmark Brent crude rose 0.06 per cent to $77.13 a barrel.

On Monday, the 30-share BSE barometer plunged by 824.29 points to close at 75,366.17 while the broader 50-share Nifty dropped by 263.05 points to close at 22,829.15, tanking below the 23,000 level for the first time since June 6, 2024.