Sensex, Nifty Rally Recoup Nearly Half Of Tuesday's Rout: Market Wrap

India's equity gauges staged a recovery on Wednesday as they recovered most of the losses incurred by the worst market crash in four years in the previous session. The surge came after the National Democratic Alliance pledged support to form a government for the third term.

The NSE Nifty 50 closed 688.95 points higher, or 3.15%, at 22,573.45, while the S&P BSE Sensex ended 2,303.1 points up, or 3.2%, at 74,382.

Intraday, the Nifty rose as much as 3.59% to 22,670.4, the highest intraday rise since Feb. 1, 2021, while the Sensex advanced 3.41% to 74,534.8.

The market capitalisation of Nifty 50 companies rose by Rs 5.3 lakh crore during trade.

After opening at Rs 83.46, the Indian rupee strengthened 15 paise to Rs 83.37 against the US dollar. The yield on the 10-year bond was trading flat at 7.03%.

The stock volatility gauge, India VIX—which rose over 50% during poll counting—fell over 30% to 18.6 during the session.

The Indian markets exhibited a spirited recovery driven by broad-based buying across sectors, as political stability appears assured, according to Vinod Nair, head of research at Geojit Financial Services Ltd. "However, attention will remain on the formation of the government and the forthcoming RBI policy meeting."

The market does not expect any change in the RBI's policy stance, given persistent high food inflation and an expectation of an increase in government spending, which has led to a notable traction in fast-moving consumer goods stocks, Nair said.

All Nifty stocks ended higher during the session.

Shares of HDFC Bank Ltd., ICICI Bank Ltd., Reliance Industries Ltd., Mahindra & Mahindra Ltd., and Axis Bank Ltd. contributed the most to gains in the Nifty.

All sectors on the NSE rose on Wednesday, with Nifty Metal and Auto rising the most.

The broader markets closed higher as the BSE MidCap ended 4.41% up and the BSE SmallCap gained 2.93%.

All 20 sectoral indices on BSE Ltd. rose. Telecommunication rose the most and capital goods underperformed.

The market breadth was skewed in the favour of buyers. Around 2,597 stocks advanced, 1,221 declined, and 100 remained unchanged on the BSE.