While the headline indices posted strong gains, sectors that have outperformed this year — such as information technology (IT) and pharmaceutical - fell, while those that lagged the market, such as financials, hospitality, and aviation, rallied sharply.
The BSE IT and Healthcare indices fell nearly 4 per cent each. On the other hand, stocks such as Indian Hotels, Lemon Tree Hotels, InterGlobe Aviation, and Bajaj Finance dominated the leaderboard.
A similar trend was seen on the Wall Street on Monday, where firms such as Zoom and Netflix— seen to be benefiting from the stay-at-home theme - tanked, and airlines, cruise lines, and energy companies jumped.
"Now that there is a breakthrough in the vaccine, there is a rally in the hospitality and aviation stocks globally, as there is scope for revival in these businesses. At the same time, the businesses which were benefiting from Covid saw profit booking. But this is a knee-jerk reaction and will last for a few days. Those which rallied on Tuesday will not see positive movement unless their revenues pick up," said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.
Market players said the news
on the breakthrough in the vaccine would be a shot in the arm for the global economy.
"The global financial markets
experienced a wave of euphoria over the potential breakthrough in the coronavirus
vaccine development. Indian indices moved in sync with global peers, touching fresh highs with continued support from banking stocks. An uptick in beaten-down stocks and sectors is on hopes of recovery in the business. The existing momentum can sustain on vaccine development, the domestic stimulus package, consistent foreign institutional investor inflows, and a bounce in globalisation after the Biden victory. However, temporary correction due to profit booking cannot be ruled out because the market is highly optimistic that the vaccine development will rapidly improve the ground reality" said Vinod Nair, head of research, Geojit Financial Services.
The sharp upmove in the market in recent weeks has been underpinned by robust capital flows. So far this month, foreign portfolio investors (FPIs) have pumped in close to $3 billion. On Tuesday, FPIs invested Rs 5,627 crore.
While most global markets
gained on Tuesday, the rally was seen tapering off in some markets.
Analysts said even though the news
on the vaccine is a sentiment-booster, the process of actual implementation would take a while and concerns over legal challenges to the US elections persist.
India continues to be the second-worst affected nation due to Covid-19. As of Tuesday, India had 8.5-million Covid-positive cases, according to the World Health Organization estimates.
The market breadth was slightly negative, with total advancing stocks at 1,227 and those declining at 1,484 on the BSE. Two-thirds of the Sensex components ended the session with gains.
Bajaj Finance was the best performing Sensex stock and gained 8.8 per cent.
IndusInd Bank rose more than 7.7 per cent.
Larsen & Toubro by 7 per cent.
Tech Mahindra and HCL Technologies were the worst-performing stocks and fell 5.7 and 5.4 per cent, respectively.