The benchmark indices rose for the second consecutive day during the week, aided by positive global cues. The benchmark Sensex ended Tuesday's session at 57,897 - a gain of 477 points, or 0.8 per cent. The Nifty, on the other hand, ended the session at 17,233 - a gain of 147 points, or 0.86 per cent.
The S&P 500 on Monday hit another record high on the back of strong US retail sales data. The S&P 500's record close improved sentiment on the resilience of a global recovery amidst Omicron concerns.
"The market seems to have got its mojo back just before the year-end. Reduced foreign institutional investor activity and positive newsflow around economic growth have helped the market over the past few days," said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.
The indices had risen during three of the five sessions last week.
On Monday, concerns about Omicron were mitigated by a slew of studies that claimed that the new variant could be less lethal than expected. Hopes of US stimulus and vaccine efficacy against the Omicron variant also lifted sentiment.
All these factors had helped the Sensex gain around 2,075 points, or 3.07 per cent, from its close on December 20. The Sensex shed around 1,190 points, or 2.09 per cent, on December 20 and another 1,775 points during the week earlier.
Sustained selling by foreign portfolio investors due to valuation concerns, change of stance by central banks, including the US Federal Reserve regarding their monetary support, and the Omicron variant's emergence had rattled investors.
Experts have, however, warned that these factors could still lead equity markets to a period of sustained volatility. The number of global Covid cases hit a record high on Monday. The surge has led to speculations that public health systems across the globe could be under stress and potentially disrupt the opening up of economies.
On Tuesday, India's Omicron cases went up to 653. More restrictions were announced in the national Capital, including an order to shut cinemas, banquet halls, and other public places. The central government approved two vaccines for emergency use against Covid.
Going forward, analysts said the upcoming Union Budget and the results season could be key triggers for equity markets from next year onwards.
"The government's focus is clearly on supporting growth through sufficient liquidity and low-interest rates, despite the Street's fears over rising inflation, changes to interest rate policy by global economies, and high commodity prices. India is at the beginning of the capital expenditure (capex) revival phase. Therefore, corporate earnings recovery looks sustainable and premium valuations might sustain. The revival of capex and higher growth potential over the next one to two years will keep the Indian economy expanding ahead of many other nations. This will lead to a bounce-back in indices going into 2022," said Mitul Shah, head-research, Reliance Securities.
The market breadth was strong, with 2,590 stocks advancing against 805 declines. Around 372 stocks hit their 52-week highs on Tuesday on the BSE, and 711 were locked in their upper circuit. All the Sensex stocks, barring two, ended the session with gains.
Reliance Industries rose 1.2 per cent and contributed most to index gains. All the sectoral indices on the BSE ended their session higher. Capital goods stocks rose the most, and its sectoral index rose 1.56 per cent on the BSE.
To read the full story, Subscribe Now at just Rs 249 a month