Sensex, Nifty gain as banks rally on RBI move and West Asia tensions ease

Indian equity benchmarks traded higher on Tuesday, with banking and financial stocks leading gains after the Reserve Bank of India (RBI) detailed a concessional forex swap facility for overseas borrowings. Improved global sentiment following a pause in hostilities between Israel and Iran also supported risk appetite.

The benchmark Nifty 50 rose 0.36 per cent to 23,205.2, while the BSE Sensex gained 0.35 per cent to 73,776.79 as of 9:46 am IST.

Thirteen of the 16 major sectoral indices were in positive territory. The small-cap and mid-cap indices advanced about 1 per cent each.

Banking and financial stocks gained around 1.2 per cent and 1 per cent, respectively, after the RBI allowed lenders to access a concessional swap facility for overseas borrowings with a minimum maturity period of three years.

“RBI’s concessional swap facility is a structural level to bridge the loan-to-deposit ratio gap for financials, lower incremental cost of deposits and improve net interest margins,” said Kunal Shah, analyst at Citi Research.

Broader Asian markets rose 2.5 per cent, recovering part of the losses recorded in the previous session.

Investor sentiment improved after Iran and Israel said on Monday that they had halted attacks on each other following an appeal from U.S. President Donald Trump. However, Tehran warned it would resume hostilities if Israel continued to strike Hezbollah in Lebanon.

Brent crude futures traded at around $93.3 per barrel, down from about $97 before Indian markets closed on Monday.

“Global equities are seeing some recovery following signs of pause in Israel-Iran hostilities, but traders remain cautious due to lingering Middle East uncertainty,” said Aakash Shah, technical research analyst at Choice Broking.

“The immediate trading range for Nifty is seen between 23,000 and 23,300 and a decisive move beyond either side is likely to determine the next directional trend,” Shah said.

Among individual stocks, heating equipment manufacturer JNK India surged 9.6 per cent after securing an order in the UAE worth between 1 billion rupees and 3 billion rupees.

Vaccine and drugmaker Panacea Biotech climbed 11 per cent after launching the Denstar project to develop a dengue vaccine specifically for Africa.