Domestic markets on Tuesday surged over 1% led by intense buying in auto and energy stocks supported by positive macroeconomic outlook as investors looked beyond US President Donald Trump's plans to end India's preferential trade treatment.
The US withdrawal of the Generalised System of Preferences for Indian products is claimed to have limited impact, and India does not plan to impose retaliatory tariffs on goods imported from the US.
Under the GSP programme, India exports $5.6 billion worth of goods to the United States duty-free.
BSE Sensex surged 378.73 points, or 1.05% to 36442.54, while NSE Nifty 50 rose 123.95 points, or 1.14% to 10987.45. Sensex on Tuesday touched an intra-day high 36,457.44 points whereas Nifty touched a high of 10994.90.
Buying was seen across all sectors except for IT and technology stocks. Auto stocks surged 3.06%, followed by oil and gas (2.75%), and basic materials (2.70%).
Of the 30-stock BSE Sensex, all scrips except six posted gains. Infosys, Hindustan Unilever, TCS, PowerGrid, L&T, and YES Bank reported losses between 0.04% and 1.15%. On the other hand, Tata Motors-led the Sensex chart with 7.72% gain, followed by HeroMoto Corp (4.6%), Axis Bank (4.12%), ONGC (3.96%), Coal India (3.4%) and Tata Steel (2.83%).
Continuing their recent performance, the midcap and smallcap stocks outperformed BSE Sensex. S&P BSE MidCap surged 2.01% while S&P BSE SmallCap rose 3.11%.
According to an analyst, the market gains reflect the pre-election optimism among investors, as geopolitical tension between India and Pakistan show signs of easing. Unlike last week, when fears gripped the market of an impending war between the two nations, tensions have pacified somewhat this week.
Hemang Jani, head – advisory, Sharekhan by BNP Paribas, said India-Pakistan hostilities seemed to have cooled down for the time and equity markets have taken the news positively.
Sensex has gained 575 points in the last two trading sessions.
"Going forward, the outcome of 2019 general elections remains crucial for the Indian markets. Concerns remain on the slowing gross domestic product growth (6.6% in Q3FY19, which was lower than expected). On the global market front, Chinese GDP, too, is witnessing the slowest growth in the last three decades," he said, adding that investors should continue to remain selective on the markets and see pockets of opportunities.
Meanwhile, the country's services sector activity gathered momentum in February, driven by a quicker expansion in new work orders that supported a faster increase in output and job creation, a monthly survey showed on Tuesday. The seasonally adjusted Nikkei India Services Business Activity Index rose from 52.2 in January to 52.5 in February, indicating an upturn in output.
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