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Indian equity benchmarks rebounded from early lows to close over a per cent higher on Tuesday, helped by heavy buying in index heavyweights Tech Mahindra, Reliance Industries and Bajaj Finserv amid gains in global equities. After making cautious start, domestic markets traded in the red for most part of the session, as traders were worried as rating agency Fitch in its Global economic Outlook-March 2022 has slashed India's growth forecast for the next fiscal to 8.5 per cent from 10.3 per cent. The agency slashed India's growth forecast on account of sharply higher energy prices. Some concern also came after Reserve Bank of India (RBI) Governor Shaktikanta Das said that all COVID-related liquidity relief measures extended by the central bank have come with a sunset date and would be withdrawn in due course. Some pessimism also came as foreign institutional investors (FIIs) were net sellers in the capital market, as they sold shares worth Rs 2,962.12 crore on Monday.

However, the domestic bourses recovered from intraday losses during late deals to end higher, taking support from Reserve Bank Governor Shaktikanta Das’ statement that the RBI will continue to ensure adequate liquidity to support the economy, which is facing many headwinds in the form of soaring crude oil and key commodity prices following the Russian invasion of Ukraine. Some support also came as Commerce and Industry Minister Piyush Goyal stating that several ministries, which are related to e-commerce, are deliberating on the e-commerce policy draft and it will be put out in the public domain after discussions. Meanwhile, Parliamentary panel has suggested that the government should extend the period of repayment of loans under the Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector. The Parliamentary standing committee on industry has also asked the government to digitize the GST system to ensure paperless refund of claims.

On the global front, Asian markets settled mostly higher on Tuesday, while European markets were trading higher after reports emerged that Ukrainian President Volodymyr Zelensky was prepared to discuss a commitment from Ukraine not to seek NATO membership in exchange for a ceasefire, the withdrawal of Russian troops and a guarantee of Ukraine's security. Also, investors appeared to take in stride Federal Reserve Chair Jerome Powell's comments Monday that the U.S. central bank was prepared to raise rates aggressively, if needed.  Back home, aviation industry stocks were in limelight as domestic air traffic rose 20 per cent sequentially to 7.69 million in February, up from 6.4 million in January. Airlines saw a sharp rebound in traffic with the decline of Covid cases and easing of restrictions. This was reflected in a jump in passenger load factors registered in February. There was some reaction in insurance companies stocks with a private report that the government is soon likely to announce a plan to strengthen state-run general insurance firms, including details of the capital infusion of about Rs 5,000 crore that it has already approved.

Finally, the BSE Sensex rose 696.81 points or 1.22% to 57,989.30 and the CNX Nifty was up by 197.90 points or 1.16% to 17,315.50.    

The BSE Sensex touched high and low of 58,052.87 and 56,930.30, respectively. There were 26 stocks advancing against 4 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.17%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were Energy up by 1.96%, Oil & Gas up by 1.94%, IT up by 1.93%, TECK up by 1.76% and Bankex up by 1.07%, while Realty down by 1.06%, FMCG down by 0.71%, Healthcare down by 0.47% and Consumer Durables down by 0.47% were the losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 3.83%, Reliance Industries up by 2.59%, Bajaj Finserv up by 2.46%, ITC up by 2.21% and TCS up by 2.09%. On the flip side, Hindustan Unilever down by 2.81%, Nestle down by 2.49%, NTPC down by 0.08% and Sun Pharma down by 0.06% were the top losers.

Meanwhile, notwithstanding fears of imported inflation given the massive spike in commodity prices, especially crude oil, after Russia invaded Ukraine last month, Reserve Bank of India (RBI) Governor Shaktikanta Das has said there is no prospect of the economy falling into a stagflation vortex and retail inflation is expected to moderate going forward. Stagflation or recession-inflation is a situation in which prices rise too high but the economy slows or falls into a recession like situation and also unemployment jumps.

Under the agreement with the government the Reserve Bank has to ensure that CPI inflation remains at 4 per cent with a margin of 2 per cent on either side. Already retail inflation has risen to 6.07 per cent in February, crossing the upper band of the Parliamentary mandate. This is the second consecutive month in 2022 when retail inflation has crossed the 6 per cent mark having hit 6.01 per cent in January. The previous high was 6.26 per cent in June 2021. Similarly wholesale price inflation in February rose to 13.11 per cent on hardening of prices of crude and non-food items, even though food articles softened.

The governor also expects the rupee to remain stable. The rupee has been the worst performer among the emerging market peers since Russia’s invasion of Ukraine and plunged to a low of 77.27 early this month. According to the latest RBI data, the central bank defended the rupee vigorously earlier this month by selling close to $10 billion from the reserves, making it the highest forex intervention by the monetary authority in a decade.

The CNX Nifty traded in a range of 17,334.40 and 17,006.30. There were 42 stocks advancing against 8 stocks declining on the index. 

The top gainers on Nifty were Tech Mahindra up by 4.19%, BPCL up by 3.02%, Tata Motors up by 3.01%, Reliance Industries up by 2.46% and Bajaj Finserv up by 2.41%. On the flip side, Hindustan Unilever down by 2.85%, Nestle down by 2.65%, Britannia Industries down by 2.23%, Cipla down by 1.55% and Eicher Motors down by 0.16% were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 41.65 points or 0.56% to 7,484.04, France’s CAC increased 45.01 points or 0.68% to 6,627.34 and Germany’s DAX increased 120.63 points or 0.84% to 14,447.60.

Asian markets settled mostly higher on Tuesday despite concerns over rising geopolitical tensions and a hawkish commentary from Federal Reserve Chairman Jerome Powell. China's Shanghai Composite index ended higher after the country's cabinet pledged measures to boost market confidence, shore up economic stability and keep capital market development stable and healthy. Japanese shares ended sharply higher as markets reopened after a holiday. The Nikkei average extended gain for a sixth straight session amid optimism that a weakening yen could bolster exporters' outlook.

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