India’s benchmark stock market indices ended higher on Tuesday after a highly volatile trading session, supported by improved investor sentiment following the announcement of a bilateral trade deal between India and the European Union.

At the close of trade, the Nifty rose 0.51 per cent, or 126.75 points, to settle at 25,175.40. The Sensex also ended higher, gaining 319.78 points, or 0.39 per cent, to close at 81,857.48.

“A sustained breakout above 25,400 would be required to revive a stronger bullish trend, while a decisive breakdown below 25,000 could invite accelerated selling toward the 24,900–24,600 zone,” an expert stated.

“Until a directional trigger emerges, the index is likely to remain confined within the 24,900–25,200 consolidation band,” as per the expert.

Under the deal, EU goods exports to India are expected to double by 2032, as tariffs on nearly 96.6 per cent of EU goods exported to India will be eliminated or reduced.

At the same time, the European Union will remove or lower tariffs on about 99.5 per cent of goods imported from India, boosting trade prospects for both sides.

Despite the overall positive finish, several heavyweight stocks weighed on the market.

Shares of Mahindra & Mahindra, Asian Paints, Kotak Mahindra Bank, Eternal, ITC and Maruti Suzuki India ended lower, with some stocks declining by as much as 4 per cent.

On the other hand, buying interest was seen in stocks such as Axis Bank, Adani Ports, NTPC, Tech Mahindra, Tata Steel and State Bank of India, which rose by up to 5 per cent and supported the indices.

Broader markets also reflected positive sentiment. The Nifty Midcap 100 index ended 0.59 per cent higher, while the Nifty Smallcap 100 gained 0.41 per cent by the end of the session.

Among sectoral indices, the metal sector emerged as the top performer, with the Nifty Metal index jumping 3 per cent.

In contrast, the Nifty Media index declined 1.4 per cent, while the Nifty Auto index ended the day 0.9 per cent lower.

Analysts said that markets managed to close on a positive note as investors reacted to the long-term trade benefits expected from the India-EU agreement, even as stock-specific selling and sectoral weakness kept volatility high during the session.

"In the near term, investors are awaiting the US FED’s upcoming interest rate decision and the Union Budget for future direction," an analyst stated.