Nifty tops 21,900, Sensex touches new high; IT, PSU bank, realty stocks rally

The ongoing December quarter earnings season is likely to be the biggest factor driving market returns in the near term, according to analysts

A sharp rally in IT stocks pushed Nifty, Sensex to fresh record highs. Better-than-expected performance by tech majors Infosys and TCS triggered an all-around rally in the IT space pushing Nifty beyond 21,900 for the first time ever. Even the weak global market mood, and higher-than-expected US inflation data failed to dent investor sentiment.

The Sensex closed 847.27 points or 1.18 percent higher at 72,568, and the Nifty was up 247.30 points or 1.14 percent at 21,894. About 1,764 shares advanced, 1,514 declined, and 55 were unchanged.

In the broader market, BSE Midcap and Smallcap indices were trading with gains of 0.36 percent and 0.41 percent respectively.

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Indian markets soared to new heights in a powerful rally, driven by IT heavyweights. Green shoots of recovery in the IT sector on the back of an improved outlook for BFSI in FY25 positively influenced market sentiments," said Vinod Nair, Head of Research, Geojit Financial Services.

“Despite a seasonally weak quarter exacerbated by global macroeconomic headwinds, Indian IT majors reported neutral to better earnings in their Q3 earnings," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Comparatively, TCS performed well across various metrics, while Infosys did some adjustments in their future guidance. "Post the results we continue to remain optimistic on the sector for the long term," Tapse added.

Except Nifty Auto and Nifty Pharma, all other sectoral indices were trading higher with Nifty IT index leading the gains, ending 5 percent higher. This was followed by Nifty PSU Bank which rose nearly 3 percent as investors remain bullish on their positive growth outlook in the near term.

The robust performance of PSU banking stocks is underscored by the inherent synergy between their loan portfolios and the prevailing business cycle, according to Nair.

Other top gainers were Nifty Energy, Nifty Infra, Nifty Metal and Nifty FMCG that rose up to half a percent. Nifty Realty jumped over 2 percent as Macrotech Developers, Sobha, Brigade Enterprises, and Phoenix Mills gained up to 5 percent.

The ongoing December quarter earnings season is likely to be the biggest factor driving market returns in the near term, according to analysts. HDFC Bank results on January 16th will be keenly watched by the market for cues in the direction of Bank Nifty, said Vijayakumar.

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Where are Nifty, Bank Nifty headed?

On the Daily charts, Nifty has decisively broken out of the 215,00 – 21,850 range on the upside. The breakout suggests a resumption of trending moves on the upside," according to Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.

"We expect the Nifty to target levels of 22000 immediately and above that 22,300. On the downside, the zone of 21,,750 – 21,700 shall act as an immediate support as per the role reversal principle," he said.

Meanwhile, "Bank Nifty started to form higher tops and higher bottoms on the daily charts indicating trend reversal from down to up. We expect the positive momentum to continue till 48,000 on an immediate basis and above that it can extend till 48,500," Gedia added.

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