Nifty reclaims 25,000 after BJP wins Haryana state elections

Benchmark closed higher on Tuesday, snapping a six-session losing streak as investors capitalised on recent market dips. Positive sentiment was also boosted by better-than-expected results for the Bharatiya Janata Party in Haryana Assembly Elections. The state elections have given a third term to the BJP -led government in Haryana even as exit polls had predicted a weakened performance for the saffron party.

The focus now shifts to the Reserve Bank of India’s ( RBI ) policy decision scheduled for Wednesday. The central bank is widely expected to maintain its current interest rates, although some market participants anticipate a potential shift in policy stance from “accommodative” to “neutral.”

The Nifty 50 index rose by 0.88 per cent, closing at 25,013.15, while the S&P BSE Sensex climbed 0.72 per cent to end at 81,634.81. Earlier in the session, both indices had dipped by around 0.1 per cent, continuing the cautious trend seen over the last week.

“Nifty has seen the dead cat bounce which was expected from its low of 24,800. However, it is yet to close above the previous day's high, indicating the weakness to continue. The momentum indicators have recovered from the Over-sold region, however, the ADX average line is still showing weakness to continue. One can take a further bullish view in Nifty only on a close above 25,300 levels, until then the index can be sold on the Rise. Options writer's data showed a significant increase in call writing at 25,000 levels even in this bounce showing weakness to continue in the index,” said Praveen Dwarakanath, Vice President of Hedged.in.

“Banknifty bounced from its support of 51300 levels, however, it is not able to close above its previous high, indicating weakness to continue. A close above 51850 levels, can only be an indication of a reversal in the trend, until then the index status is to be taken as sell on the rise. Options writer's data showed an increased call writing at 51000 levels in the weekly expiry, indicating the index to likely close below 51000 levels tomorrow," Dwarakanath added.

The recent downturn in Indian equities was driven by escalating tensions in the Middle East, which dampened risk appetite globally. Additionally, foreign institutional investors sold Indian shares worth approximately $6 billion during this period.

“Investors viewed the dip as a buying opportunity today,” said Gaurav Dua, head of capital market strategy at Sharekhan by BNP Paribas. He also suggested that the absence of concrete stimulus measures from China might have redirected foreign investments towards India.

While foreign and domestic flow data for the session is expected to be released post-market, analysts noted that the outcome of the state elections played a crucial role in Tuesday’s rally. Election results indicated that the ruling Bharatiya Janata Party ( BJP ) is set for an unexpected victory in Haryana , while the opposition coalition appears likely to form the government in Jammu and Kashmir.

"The state election results have eased concerns that the ruling central government might be weakened by defeats in these states, fueling today’s rally," commented Sunny Agrawal, head of fundamental equity research at SBICaps Securities.

On the sectoral front, 12 out of 13 major sectors posted gains on Tuesday. Financial stocks, which have significant weight in the Nifty 50 index, rose by 1 per cent. Leading the charge were HDFC Bank and Reliance Industries, with both stocks gaining around 2 per cent.

Small- and mid-cap stocks, more focused on the domestic market, also saw gains of around 2 per cent each. Automaker Mahindra & Mahindra surged 3.5 per cent after CLSA upgraded its rating from “hold” to “outperform,” adding further momentum to the day's upward trend.