Mid, smallcap indices rise up to 1.9%; Sensex, Nifty off day's high; IT stocks surge

UltraTech Cement, Wipro, Grasim, Shriram Finance and Eicher Motors gained the most on the Nifty.

The benchmark indices, Nifty and Sensex, held onto gains but closed off their intraday peaks on January 23, buoyed by a sharp rally in IT and pharma stocks that lifted market sentiment. However, weakness in banks and oil and gas stocks kept the overall rally in check.

Mid- and small-cap stocks staged a striking comeback, rebounding 1.9 percent and 1.2 percent, respectively, after a bruising 2 percent selloff in the prior session, injecting fresh optimism into the market.

At 3:30 pm,  the Sensex was up 115.39 points or 0.15 percent at 76,520.38, and the Nifty was up 50.00 points or 0.22 percent at 23,205.35. About 2,017 shares advanced, 1,780 shares declined, and 104 shares unchanged.

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"The market has been trending lower week by week, and any intermediate pause or rebound should be viewed as a shorting opportunity unless the Nifty decisively breaches the resistance zone of 23,500-23,700" Ajit Mishra, Senior Vice President at Religare Broking said. "On the stock-specific front, the ongoing earnings season is presenting opportunities on both sides of the trade, so traders are advised to align their positions accordingly. Additionally, it is prudent to exercise extra caution in the midcap and smallcap segments and avoid averaging into losing trades," Mishra added.

"With the dollar index and US bond yields remaining elevated, FIIs are unlikely to shift to buying, which could limit the scope for a market rally despite oversold conditions," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.

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The Nifty IT index emerged as a top performer, climbing nearly 2 percent, driven by robust Q3 earnings and relief from protectionist tariffs imposed during the Trump administration. Heavyweights including Infosys, TCS, HCL Tech, Tech Mahindra, Wipro, and Coforge spearheaded the rally, reinforcing sectoral strength.

Pharma stocks also shone, with the Nifty Pharma index advancing 1.4 percent, powered by gains in Sun Pharma and Cipla. The auto sector kept its momentum, with the Nifty Auto index surging over 1 percent as marquee names like Mahindra & Mahindra, Tata Motors, and Maruti Suzuki accelerated. The FMCG index staged a comeback, rebounding from an early loss of over 1 percent to trade 0.3 percent higher by afternoon.

However, the banking and energy sectors underperformed. Nifty Bank and PSU Bank indices edged lower, while oil and gas stocks slipped by 0.5 percent, reflecting tepid sentiment in these segments.

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UltraTech Cement shares darted up 7 percent after India's largest cement manufacturer reported a 17 percent year-on-year (YoY) decline in consolidated net profit to Rs 1,470 crore for the third quarter of FY25. Despite the drop in profit, the earnings surpassed analyst expectations, as per a Moneycontrol poll that projected a 26 percent YoY decline to Rs 1,304 crore. The cement major's consolidated revenue from operations rose nearly 3 percent YoY to Rs 17,193 crore, ahead of the estimated Rs 16,696 crore, driven by volume growth across segments and better price realisations.

Shares of KEI Industries skyrocketed 8 percent on January 23, buoyed by the company's positive Q3 numbers and an upgrade in the growth guidance. The company's net profit for the December quarter climbed 9.4 percent year-on-year to Rs 164.8 crore, up from Rs 150.6 crore in the corresponding quarter of the previous fiscal. Revenue also grew nearly 20 percent to Rs 2,467.2 crore as against Rs 2,059.3 crore in the year-ago quarter.

Tech Major Wipro rose 3 percent to hit a 52-week high following positive market sentiments since its Q3 result announcement recently. The December quarter turned out to be its fourth straight quarter of margin expansion, pushing its EBIT margin to a three-year high. It reported a 4.5 percent quarter-on-quarter growth in its consolidated net profit at Rs 3,354 crore for the December quarter, while revenue saw a marginal rise of 0.1 percent to Rs 22,319 crore.

Shares of Persistent Systems gained over 10 percent after the company reported robust growth in its consolidated net profit and revenue for the December quarter, prompting mixed reactions from brokerages. The IT major posted a consolidated net profit of Rs 372.99 crore, marking a sequential rise of 15 percent and a 30 percent year-on-year increase. Its revenue also impressed, growing by 6 percent QoQ and 23 percent YoY to Rs 3,062.3 crore.

"Resistance levels persist at regular intervals, with a recent higher range around the 23,300 - 23,400 zone, corresponding to the 20 DEMA, acting as an immediate hurdle. While it’s too early to call for a decisive recovery, a breakout above the upper boundary of the falling wedge, currently placed at a dynamic level near 24,000 and aligning above all major moving averages, would be essential to trigger sustained bullish momentum," Sameet Chavan, Head of Technical Derivative Research at Angel One, said.

Anand James, Chief Market Strategist at Geojit Financial Services, noted that the previous session's strong close has bolstered investor confidence, setting sights on key levels of 23,220 and 23,430. "Early consolidation is likely around the 23,140 mark, which holds significance as a pivot. A decisive move above 23,220, however, could steer the market towards 23,360-23,440," James said. On the flip side, he warned that failure to hold above 23,055 in early trade could pave the way for a more pronounced weakness.

UltraTech Cement, Wipro, Grasim, Shriram Finance and Eicher Motors gained the most on the Nifty. Laggards included BPCL, Kotak Mahindra Bank, HCL Tech, Power Grid Corp and Reliance Industries.