The stock markets in India extended gains on January 2 with the benchmark indices surging nearly 2 percent each after consolidating within a range for almost two weeks amid heavy buying in financial, auto and IT shares.
Sensex jumped 1,436.30 points or 1.83 percent -- its best single-day gain in more than a month -- to settle at 79,943.71. During the day, it soared 1,525.46 points or 1.94 percent to 80,032.87.
NSE Nifty surged 445.75 points or 1.88 percent to 24,188.65. During the day, it surged 483.8 points or 2.03 percent at 24,226.70.
Key factors behind the market rally
1) Healthy GST Collection: The December GST mop up rose by 7.3 percent on-year to Rs 1.77 lakh crore, reflecting a rebound in consumption activities. Analysts believe this uptick signals improving economic momentum, which could bolster investor sentiment. "Despite increased refunds for both domestic and export sectors, the robust GST collection reflects steady demand and a healthy economy," said Abhishek Jain, Partner, KPMG.
2) Favourable Technical Trends: This up move has significantly eased the recent pressure, bringing the Nifty closer to its next resistance at the medium-term moving average, the 100-day exponential moving average (DEMA), currently around the 24,250 mark, said Ajit Mishra – SVP, Research, Religare Broking Ltd.
He added "A decisive breakout above this level could open the door to 24,400. On the downside, it is crucial for the Nifty to sustain above the 24,000 level; failure to do so might lead to a sideways bias again."
The Household Consumption Survey data for 2023-24 doesn’t fit premiumisation narrative
3) Earnings Optimism: Strong business updates from key sectors such as automotive and financials have raised expectations for Q3 earnings. Prominent players like Maruti Suzuki, Mahindra & Mahindra, and CSB Bank have reported promising trends, offering a positive outlook. “Luxury consumption sectors such as jewellery, aviation, and hospitality are expected to deliver robust numbers,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
4) IT Sector Boost: The IT sector, a key driver of the rally, saw its index rise by a percent on January 2. CLSA and Citi both are projecting an improved revenue growth for IT companies in the December quarter, supported by stable demand and the recent rupee depreciation. "Improved client sentiment, especially in the US, coupled with currency tailwinds, will aid IT sector’s earnings," Reuters quoted analysts Sumeet Jain and Shubham Agrawal from CLSA.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index was at 56.4 in December, down from 56.5 in November, indicating a weaker improvement in operating conditions.
However, in PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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