Closing Bell | Banks power market rebound as Nifty snaps two-day losing streak

Indian equity benchmarks bounced back on Tuesday, snapping a two-day losing streak as a sharp rally in banking stocks helped lift sentiment following the Reserve Bank of India's latest measures aimed at boosting foreign currency inflows.

The Sensex rose 395 points to close at 73,919, while the Nifty gained 119 points to settle at 23,242, finishing near the day's high. The recovery came after Monday's sharp sell-off, with investors finding comfort in easing crude oil prices and RBI initiatives designed to support liquidity and strengthen external financing conditions.

Banking shares emerged as the biggest drivers of the rally. The Nifty Bank index surged 1,131 points to 55,195, with all its constituents ending in positive territory. Heavyweights including ICICI Bank, State Bank of India and Axis Bank were among the top contributors to the benchmark gains.

The rally was triggered by the RBI's decision to introduce a specialised framework for Foreign Currency Non-Resident (FCNR(B)) deposits and External Commercial Borrowings (ECBs). The central bank also widened the scope of the ECB scheme to allow banks, in addition to public sector undertakings, to raise foreign currency borrowings.

To encourage participation, the RBI unveiled a swap mechanism offering a fixed rate of 1.5% per annum, effectively reducing a significant portion of hedging costs. Market participants viewed the move as a proactive step to attract dollar inflows.

The broader market outperformed the headline indices, signalling a return of risk appetite. The Nifty Midcap index gained 810 points, while market breadth remained firmly positive with the NSE advance-decline ratio at nearly 3:1.

Sectorally, the Nifty PSU Bank index emerged as the top performer, with every constituent ending higher. Gains were also visible across financials and select industrial stocks.

Among individual movers, Fino Payments Bank

jumped 10% after a strong May business update, while PI Industries surged 7% after key customer Kumiai raised its revenue and profit outlook. JSW Infrastructure gained 5% after emerging as the successful bidder for container berths at Kolkata Port, and RVNL advanced more than 2% following a ₹221 crore railway contract win.

Reliance Industries also contributed to the rebound, ending a nine-session losing streak. However, weakness persisted in technology stocks, with the Nifty IT index extending its losing run to a fifth consecutive session.