The benchmark Sensex was up by 376.42 points, or 1.13%, to close at 33,605.22.

It was a volatile day for Indian equities, as markets swung wildly to geopolitical news. After a strong opening, the markets slipped into the red as border tensions between India and China fuelled worries. However, the benchmark indices ended the day in the green as global cues remained positive after the US Federal Reserve stated that it would buy corporate bonds directly under its secondary market corporate credit facility. The benchmark Sensex was up by 376.42 points, or 1.13%, to close at 33,605.22. The broader Nifty50 was also up by 100.3 points, or 1.02%, to close at 9914.

Global markets, which had fallen in the previous trading session as a result of rising Covid-19 cases, were up on Tuesday after the US market swung and made gains during Monday’s trading session. The move came after the US Federal Reserve announced that it would buy corporate bonds directly under its secondary market corporate credit facility (SMCCF) instead of just ETFs.

Foreign portfolio investments in India till June 14 stands at $2.9 billion even though the foreign portfolio investors (FPIs) sold stocks worth $391.8 million on Monday from the Indian markets. Domestic institutional investors on Monday bought stocks worth $142.4 million.

Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said, “The liquidity driven rally currently is not sustainable in the long run, this is because the liquidity can go away any time for instance, the knee-jerk reaction on the potential geopolitical conflict between India and China at the border. The equity market will progress going ahead only and only on the basis of fundamentals. Having said that, as long as there is no incremental negative then, the markets will hold up and not witness a large correction.”

In the meantime, the recovery rate of Covid-19 cases in India continues to exceed the number of active cases. Kotak Institutional Equities, in its report, said, “The next important milestone would be a plateau or decline in the number of overall active cases. However, that may be some time away given continued rise in the number of new active cases, rising positive cases-to-tests ratio on an overall basis and continued high and rising positive cases-to-tests ratio in a few large states.”

The Nifty was helped by the gains made by HDFC and HDFC Bank as well as ICICI Bank. The financial stocks rose on Tuesday with Nifty Bank surging as much as 1.93% and Nifty Financial Services rising by 2.7%.