Benchmark stock market indices closed higher on Tuesday after a volatile session, as IT and PSU banking stocks rallied, helping offset a sharp fall in Reliance Industries shares.
The Nifty50 rose 0.17% to close at 25,725.40, while the BSE Sensex added 0.21% to settle at 83,450.96. Both benchmark indexes had opened lower and were down about 0.4% in early trade before recovering during the day.
The IT sector played a key role in lifting the markets. The Nifty IT index, which is the second-heaviest sector on the benchmarks, climbed 1%. Shares of Infosys rose 1.9% after the company announced a partnership with US-based artificial intelligence firm Anthropic.
Infosys said the collaboration will aim to unlock value in artificial intelligence across complex and regulated industries. The announcement came at a time when IT stocks have been under pressure due to concerns over the impact of AI on earnings.
Last week, the IT index had fallen 8.2%, marking its worst weekly performance in 11 months. The fall was driven by worries that AI-led disruption could hurt the business models and revenues of Indian software companies.
Vinod Nair, Head of Research at Geojit Investments Limited, said domestic markets traded within a narrow range as investors tried to recover recent losses linked to AI concerns.
“Domestic markets traded in a range-bound manner, attempting to recover recent losses triggered by lingering concerns over AI-led disruptions. The IT sector, following a sharp correction, witnessed selective bottom-fishing, aided by announcements of strategic collaborations with global AI partners. Meanwhile, PSU banks outperformed the broader indices, supported by positive Q3 results and favourable regulatory tailwinds. In the near term, sentiment is likely to remain cautious as investors monitor global developments around AI-driven shifts. However, a resilient GDP outlook, and a stabilising rupee may provide support to renewed FII inflows,” he said.
State-owned banks were among the top gainers. The Nifty PSU Bank index rose 2.1%, outperforming the broader market. Buying interest in these stocks was supported by positive third-quarter results and favourable regulatory developments.
Overall, 12 out of the 16 major sectors ended the day in the green. The broader market also showed strength, with the small-cap index rising 0.6% and the mid-cap index gaining 0.3%.
Market participants said sentiment is being supported by an improved earnings outlook for FY2027. December-quarter results showed early signs of a recovery in consumption and stronger credit growth at Indian lenders, according to analysts.
Stocks of the Adani Group also gained after its flagship company, Adani Enterprises, said the group plans to invest $100 billion to build renewable energy-powered, AI-ready data centres by 2035. Shares of Adani Enterprises rose 2.7%, while Adani Ports gained 1.7%.
However, gains were capped by a decline in Reliance Industries, a heavyweight in the Nifty 50 index. The stock fell 1%, almost wiping out the gains made in the previous session.
Metal stocks also came under pressure. The Nifty Metal index fell 1.1% due to a stronger US dollar, which makes commodities more expensive for buyers using other currencies.
Despite early weakness and pressure from select heavyweights, the markets managed to close in positive territory, supported by buying in IT and PSU banking stocks.
