Financials haul Indian benchmarks higher as rate cut bets outshine earnings gloom
India's benchmark indexes rose on Tuesday, led by gains in financials after the Reserve Bank of India announced a slew of measures to boost liquidity in the banking system, raising hopes of an interest rate cut in February.
The Nifty 50 rose 0.27% to 22,890.25 points as of 10:27 a.m. IST, while the BSE Sensex added 0.54% to 75,773.42.
Rate-sensitive financials and banking stocks rose about 1.6% each. Private lenders HDFC Bank, Axis Bank and ICICI Bank were among the top five Nifty 50 gainers.
The central bank's measures to inject liquidity include bond purchases and dollar/rupee swaps, which analysts and traders said could be a precursor to a rate cut next month.
LIC Housing Finance, Bajaj Finance and Mahindra & Mahindra Financial Services gained 1.5% to 4%. Citi said the trio were also potential beneficiaries.
Realty stocks, also interest rate-sensitive, gained 1.1%.
Despite the gains, "market sentiment is weak and caution prevails among investors ahead of Federal Reserve rate decision and commentary on Wednesday, and union budget on Saturday," said Devarsh Vakil, head of prime research at HDFC Securities.
Moderating earnings, U.S. policy concerns and the repercussions of China start-up DeepSeek's AI launch are adding to the uncertainty, Vakil said.
Seven of the other 12 major sectors declined.
The pharma index mirrored its 2.5% fall from the previous day on concerns over the impact on AIDS drug makers from the U.S. pausing foreign aid.
Small-caps and mid-caps continued to reel under the pressure of earnings slowdown and costly valuations, dropping 3.5% and 1.6%, respectively.
