Indian shares rose 2.5% on Tuesday, recovering all losses from the previous day, on strong buying from overseas investors.

The BSE Sensex gained 1,564 points or 2.7% to 59,537, while the Nifty gained 446 points or 2.6% to 17,759. Index heavyweights, including ICICI Bank, HDFC Bank and Reliance Industries, led gains. The NSE trading volume was the highest in more than a week, with a change ratio of 2.96:1.

Market watchers attribute the sharp rebound to concentrated buying by FPIs, especially banks and financial services firms. FPIs bought more than Rs 4,000 crore worth of shares on a net on Tuesday, taking their month-to-date buying to Rs 51,000 crore or $6.4 billion, provisional data showed. Investors’ wealth soared by Rs 5.68 trillion, and the stock market suffered a reasonable recovery.

“The rebound in local benchmarks comes against the backdrop of a recovery in indices in Asia and Europe. The focus appears to have shifted from the Fed’s hawkish stance to expectations for strong first-quarter GDP data. Despite a volatile and uncertain global macro environment, the rebound suggests that India will remain a good long-term bet.

“We believe the short-term market structure has turned from negative to positive due to a strong pullback from lower levels,” said Shrikant Chouhan, head of retail equity research at Kotak Securities.

Indian markets are considering a lot of good news, including economic recovery, lower inflation and reasonable earnings visibility.

“Valuations are pretty stiff for the broader market and for ‘growth’ consumer and investment stocks. Even Tier-1 financials are fairly expensive (some very expensive) after a strong rebound over the past two months.” However, Most valuations and NBFCs for Tier-2 and Tier-3 banks remain low,” Kotak said in a recent report on institutional equities.

Foreign brokerage Bofa Securities expects Nifty to trade in the 17,000-19,500 range, with 18,500 as the base target for CY22.

The brokerage sees six structural themes likely to emerge in India over time. This includes rapid infrastructure development, decarbonisation, reducing imports and exports, opening up government monopolies, improving tax compliance and digital/financial inclusion.

“These trends, combined with continued reform momentum, have the potential to kick off a multi-year upcycle in CAPEX, real estate, credit growth and start-ups, and potentially create room for a long-term reduction in India’s twin deficits. So, in the long run, we stay constructive on the market,” the brokerage said in a note.

Global stocks rose on Tuesday as investors sought to buy the dip after two days of losses. Chinese authorities have pledged to stimulate the world’s second-largest economy with measures to stimulate demand and stabilise employment.

The index will now face resistance in the 17,965-17,992 range, while the 17,522-17,623 range may provide support.