Benchmark indices Sensex and Nifty rallied on Friday, buoyed by robust buying in interest rate-sensitive stocks, particularly from the banking and auto sectors. The rally comes as global markets, including Japan, China, and Taiwan, also posted gains. Meanwhile, optimism around potential personal income tax cuts in the upcoming Union Budget added to the positive sentiment.
Market Highlights
The BSE Sensex surged to cross the 79,000 level in intraday trading before settling at 78,990.40, up 517.92 points (0.66%). Meanwhile, the Nifty 50 rose by 169.75 points (0.71%) to close at 23,919.95.
Key contributors to the rally included:
- IndusInd Bank: The top Sensex gainer, advancing 3.48% to close at ₹964.55.
- Tata Motors: Jumped 3% to reach ₹763 apiece.
- Mahindra & Mahindra (M&M): Rose by 2.5%.
- Bajaj Finance, Maruti Suzuki India: Gained between 1.8-2.5%.
- ICICI Bank, HDFC Bank, Reliance Industries Ltd, NTPC, and Bharti Airtel: Rose by up to 1.2%.
Sectoral Insights
The rally was supported by optimism in interest rate-sensitive sectors, including:
- Banking: Stocks like ICICI Bank and IndusInd Bank led the sector’s gains.
- Auto: Shares of Tata Motors and Mahindra & Mahindra saw notable upticks amid positive growth prospects.
However, concerns remain about the IT and metal sectors. Nuvama Institutional Equities flagged TCS and Mphasis as potential short candidates due to sectoral weakness, along with DMart and Hindalco.
Expert Insights on Market Trends
“January tends to be a slower month historically, with the Nifty closing in the red 70% of the time over the past decade,” observed Nuvama Institutional Equities. The brokerage predicts challenges for Nifty to breach the 24,350 mark and anticipates a sell-on-rally strategy unless foreign institutional investor (FII) participation strengthens.
Bullish Picks:
- Coforge Ltd and One 97 Communications (Paytm) are among the 25 probable names on MSCI’s radar.
- Zomato is highlighted as a strong contender for Nifty 50 inclusion by March 2025.
Volatility and Economic Concerns
The India VIX, a key measure of market volatility, fell by 5.77% to 13.23, indicating reduced short-term market fluctuations. However, analysts remain cautious:
- Dollar Index: A strong dollar, hovering above 108, coupled with attractive US bond yields (10-year yields at 4.35%) continues to trigger FII outflows.
- Market Headwinds: V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that short-term economic bumps are causing corrections and volatility. “A shift in FII strategy from selling to buying will depend on signs of macroeconomic recovery and corporate earnings growth,” he added.
As the market navigates these dynamics, interest rate-sensitive sectors and select high-conviction picks are likely to remain under investor focus.
