Sensex Rises Over 280 Points, Extending Gains From Monday's Blistering Rally

Indian equity benchmarks rose in early trade on Tuesday, extending gains after a blistering rally in the previous session when domestic stocks stalled a four-day losing run.

The BSE Sensex index rose 287.55 points, or 0.47 per cent, to 60,853.97 in early trade, and the broader NSE Nifty-50 index jumped 81 points, or 0.45 per cent, to 18,095.60, reflecting a broader positive mood in Asian indexes.

Domestic benchmarks had reversed course to rally sharply on Monday in a low-volume session, stalling a four-day losing streak, with the Sensex rallying 721.13 points, or 1.2 per cent, to close at 60,566.42, and the Nifty rose 207.80 points, or 1.17 per cent, to end at 18,014.60.

"Markets may start on a higher note on Tuesday tracking gains in global indices, as investors resort to more short covering and value buying following the recent sell-off," said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.

"Investors will be hoping that stocks will stage a Santa Claus rally, bringing some more respite to the markets. However, volatility is likely to be the hallmark in the near term amidst December F&O expiry this Thursday," he added.

Globally, stock markets rose, and the US currency declined on Tuesday on improved risk appetite after China announced it would remove its quarantine requirements for incoming tourists, significantly easing three-year border controls intended to stop COVID-19.

According to Chaoping Zhu, Global Market Strategist at JPMorgan Asset Management, the most recent policy change from China suggests that economic activity in the majority of big cities may swiftly return to normal, which is excellent news for investors, reported Reuters. 

"Most Chinese cities could recover from the first wave of the latest COVID-19 outbreak by January...this would be faster than people have expected," he said, adding there was concern of an outbreak lasting longer and weighing on the economy, but that developments have been in general better than expected.

He added that the opening of China, which also means that Chinese tourists will be allowed to travel again, will boost the consumer and service industries outside of the nation, particularly those in neighbouring Southeast Asia.

As traders return to their terminals on Tuesday following the Christmas holiday, stocks are expected to climb, derived from US stock futures, which rose in low volumes trading as some markets, like those in Australia and Hong Kong, are still closed.

Meanwhile in the energy market, Tuesday saw a little increase in oil prices due to worries that the production and logistics of shale oil and petroleum products are being hampered by winter storms sweeping the US.