The Sensex surged by 400 points, with the Nifty surpassing 23,150 as public sector bank and metal stocks experienced a strong rally.
The Sensex surged by 400 points: The benchmark indices Nifty and Sensex kicked off January 14 on a strong note, breaking a four-day losing streak. Investors were pleased to see CPI inflation cooling to a four-month low of 5.22 percent. This welcomed news has experts predicting further easing inflation, potentially setting the stage for the MPC to cut policy rates by 25 basis points in February amidst signs of slowing growth.
As a result, metal and PSU bank stocks saw significant gains, while IT stocks opened in the red following a disappointing Q3 from HCL Tech. This turnaround comes just a day after the frontline indices plummeted over a percent each, wiping out Rs 12.39 lakh crore in market cap.
By 9:30 am, the Sensex had surged 372.46 points or 0.49 percent to 76,702.47, and the Nifty was up 107.40 points or 0.47 percent at 23,193.35. Of the shares traded, 1,955 advanced, 898 declined, and 124 remained unchanged.
Market analysts suggest that the market may be slightly oversold, hinting at the potential for a short-term rebound. However, any recovery is expected to be short-lived due to various challenges, including 10-year US bond yields surpassing 4.7 percent, uncertainty surrounding Trump’s post-January 20 actions, India’s economic slowdown, weak corporate earnings, and a sharp increase in crude prices.
Despite these challenges, factors such as strong US labor market data (NFP) and a rising dollar index could hinder hopes of fewer Federal Reserve rate cuts in 2025. These factors have led to significant fund outflows from emerging markets, including India, adding pressure to the broader market. The market’s direction in the near future will heavily rely on the ongoing earnings season, which, if disappointing, could further dampen the prevailing negative sentiment.
Mid- and small-cap stocks experienced a much-needed boost, with gains of 1.7 percent and 1.5 percent, respectively. Aishvarya Dadheech, Chief Investment Officer and Founder of Fident Asset Management, believes that while the Nifty and large caps may be oversold, the mid and small-cap segments could still face challenges. The broader market has had a rough start to the new year, already dropping nearly 10 percent.
In terms of sectoral indices, Nifty IT was the only one to see losses of over a percent, following disappointing Q3 results from HCL Tech. The PSU Bank index, on the other hand, broke a four-day losing streak and surged nearly 2 percent, driven by SBI and Bank of Baroda. Nifty Realty, which suffered a 6 percent drop the previous day, rebounded with a gain of over 1 percent on January 14. Auto, Nifty Bank, and Oil and Gas sectors also saw gains of 1 percent each.
HCL Tech shares plummeted 5 percent as brokerages remained cautious following the company’s Q3 earnings report. Despite meeting expectations, the slight revision in revenue growth guidance for Q4 left investors disappointed. BSE shares, on the other hand, rose over 4 percent after international brokerage Jefferies upgraded its rating on the exchange to hold, citing strong growth prospects for India’s capital markets.
Shares of defense major Bharat Electronics surged 2 percent after securing additional orders worth Rs 561 crores. These orders include communication equipment, electro-optics, upgrades for the satcom network, radar & fire control systems, spares, and services. With these new orders, the company has now accumulated orders totaling Rs 10,362 crores in the current financial year
Following a strong start, Nifty is expected to find support at 23,000, with additional support levels at 22,900 and 22,800. On the upside, immediate resistance is seen at 23,250, followed by 23,400 and 23,500, according to Hardik Matalia, a Derivative Analyst at Choice Broking.
The Bank Nifty charts suggest that the index could receive support at 47,900, with further support at 47,500 and 47,300. If the index continues to rise, the key resistance levels to watch for are 48,400, 48,700, and 49,000, Matalia added.
NTPC, Hindalco, Tata Motors, SBI, and Bajaj Finance were among the top gainers on the Nifty, while HCL Tech, HUL, Tech Mahindra, Britannia Industries, and TCS were the major laggards.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.