Investors gain Rs 5 lakh crore as Sensex, Nifty gain over 1% each; key factors behind the rally

Benchmark indices Sensex and Nifty closed higher on Tuesday after FM Nirmala Sitharaman said the government was open to hear views on demand for removal of LTCG tax. The FM also said it was healthy to have a debate on STT. Sensex closed 1109 points higher at 73,033 and Nifty rose 358 points to 22,721. Sensex extended gains in the afternoon trade after the FM's statement. Investor wealth on BSE rose by Rs 4.62 lakh crore to Rs 470.07 lakh crore against the previous session's market cap of Rs 465.45 lakh crore.    Among Sensex constituents, HCL Technologies stock zoomed over 8% to Rs 1321.55. Other IT peers such as TCS, Tech Mahindra and Infosys also rose up to 6% and were among the top gainers on both Sensex and Nifty.

HUL, Trent, Bajaj Finserv, Bajaj Finance, Titan Company, M&M and BEL were the other gainers, rising up to 2.94%. Shares of Kotak Bank, Eternal and Maruti Suzuki were the only Sensex losers, falling up to 0.90% today. 

In terms of sectors, IT shares were the top gainers with the BSE IT index rising 1340 points to 28,560. Nifty IT index too jumped 5.22% to Rs 29,830. 

Analysts on market outlook

Ajit Mishra, SVP – research, Religare Broking said, "From a technical perspective, Nifty’s recovery above 22,700 offers near-term relief following the recent sharp correction. However, the 22,900 level, coinciding with the 20-day exponential moving average (20-DEMA), is likely to act as the immediate hurdle, followed by the 23,000–23,200 zone. On the downside, the 22,300–22,500 zone is likely to provide immediate support. Despite the sharp rebound, persistent macroeconomic uncertainties warrant a cautious approach, with a preference for selective stock-specific opportunities and disciplined risk management."

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities said, "Nifty is struck within a broader high low range of 22,800-22,300 levels. A decisive move above the immediate resistance of 22,800 could confirm important bottom reversal pattern for the market and that is likely to open further short covering in Nifty ahead. Any weakness could find support around 22,550."

Nandish Shah - Deputy Vice President, HDFC Securities said, "Technically, Nifty’s close above the 13-day DEMA for the first time since 25 August 2026 marks an early improvement in short-term momentum. The index has also confirmed a higher top and higher bottom on a closing basis, validating a short-term bullish reversal. Resistance is now seen in the 23,100–23,150 zone; a decisive breakout above this band would further strengthen the bullish structure. On the downside, support has shifted higher to 22,580, followed by 22,300. As long as these levels hold, the near-term bias favors buying on dips."

Other factors behind market rally today

India VIX, the NSE's volatility index, fell 7.41% today. The fall in India VIX came after Indian market rallied on the back of a fall in brent crude prices, rally in IT stocks and IMF raising India's growth forecast.    Brent crude prices fell on Tuesday, snapping three days of gain. Brent crude fell below $106 a barrel in Asian trade after rising over 6% over the previous three sessions. It hit a high over $107 in the previous day's trading before falling to $105.87. Benchmark US crude was also down 1.5% to $92.34 a barrel.

Another factor, which led to a sentimental boost in the IT stocks was a selloff in South Korea's Kospi  led by a crash in Samsung Electronics and SK Hynix. Investor concerns over the sustainability of the AI-driven rally have weighed on sentiment, clouding the outlook for memory chipmakers. 

International Monetary Fund (IMF) expressing confidence in India’s growth trajectory also boosted market sentiment. The IMF raised its forecast for the financial year 2026-27 to 7 per cent, up from an earlier estimate of 6.4 per cent made in July. The improved outlook indicates that domestic demand and robust services activity are contributing significantly to the economy’s resilience, despite increasing global uncertainties.