Sensex jumps 300 pts from day's low, Nifty above 23,150 as IT leads the rally, small and midcaps outperform

Wipro, UltraTech Cement, Trent, M&M, and Tech Mahindra were the major gainers on the Nifty.

Benchmark indices Nifty and Sensex are attempting to regain momentum on January 23, driven by a strong rally in IT stocks, as the Nifty 50 index inched up above 23,200, helped by a 2% rise in the IT index. Midcap IT names like Persistent Systems and Coforge notched up early gains, lifting investor sentiment. However, weakness in FMCG and PSU banking shares tempered the overall mood. HDFC Bank, the largest private lender, was treading in the positive territory, supported by robust third-quarter earnings.

Global cues were positive as Wall Street's indexes rose, with the benchmark S&P 500 hitting an intraday record high as investors cheered streaming video provider Netflix's quarterly report and President Donald Trump's private-sector artificial intelligence infrastructure investment plan.

At about 9:45 am, the Sensex was up 153.54 points or 0.20 percent at 76,558.53, and the Nifty was up 42.15 points or 0.18 percent at 23,197.50. About 1,911 shares advanced, 1,050 shares declined, and 128 shares unchanged.

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Analysts say that the market is currently in a corrective phase, with pullback attempts being sold into. A key factor contributing to this trend is the lack of short-covering activity by foreign institutional investors (FIIs), who continue to hold about 83 percent of their positions on the short side. This ongoing selling pressure in the cash segment is keeping stock prices under pressure.

"Relentless selling by the FPI, the slowdown in the economy and miss in the corporate earnings are the key points concerns clouding the Indian investors," Jaykrishna Gandhi, Head of Institutional Equities at Emkay Global Financial Services said. He added that the emerging markets have hardly generated returns over a decade vis a vis the US market in USD terms, any incremental flows or lower selling in the emerging markets could be confirmed only once the dollar weakens.

The broader market witnessed a much needed respte as the mid-small cap indices rose 0.3 percent, each. This follows a sharp sell-off yesterday, where both indices tumbled 2 percent each. "High-beta segments like mid- and small-caps are witnessing steeper corrections. Mixed earnings in these segments have also limited the sustainability of pullbacks at higher levels," said Ruchit Jain, Vice President of Technical Research at Motilal Oswal. He added that broader market pressure is likely to persist, as such corrections are common during these phases.

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Among sectoral indices, Nifty IT emerged as one of the best performers, rising over 1 percent, buoyed by strong Q3 results and insulation from Trump-era protectionist tariff policies. Heavyweights like Infosys, TCS, HCL Tech, Tech Mahindra, Wipro, and Coforge drove the gains. In contrast, the FMCG index slumped 1 percent following weak earnings from HUL. PSU Bank stocks extended their losing streak, shedding 0.6 percent. Other indices, including Nifty Metal, Energy, Bank, Realty, and Auto, declined by up to 0.5 percent.

FMCG bellwether stock Hindustan Unilever (HUL) plunged over 3 percent after the consumer staples reported an underwhelming earnings show for the October-December quarter (Q3) of the current financial year (FY25). UBS, CLSA and Goldman Sachs have dished out bullish calls on the stock. The FMCG giant reported flat underlying volume growth, with analysts projecting a modest 1-2 percent rise driven by price hikes in soaps and tea. Demand conditions are likely to mirror those of the September quarter.

Shares of Persistent Systems gained over 7 percent on December 22 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.

Coforge shares rallied 9 percent after it reported an 8.4 percent sequential revenue growth in constant currency terms for the quarter. In US Dollar terms, revenue rose 7.5 percent quarter-on-quarter to $397 million, while in rupee terms, it increased by 8.4 percent to Rs 3,318.2 crore. Net profit for the period climbed 6.6 percent to Rs 215.5 crore. Notably, this marked the second consecutive quarter where Coforge's order intake exceeded $500 million.

Shares of Polycab India rose over 2 percent following the company's Q3 results. A host of brokerages remained bullish on the stock. The wire manufacturer reported a consolidated net profit of Rs 457.57 crore in the October-December quarter of the current financial year. This marks an increase of 11 percent from the Rs 412.85 crore net profit reported in the corresponding quarter of FY24.

Read more: HDFC Bank aims to further reduce credit-to-deposit ratio next 2-3 years, eyes faster growth by FY27

"After a negative opening, Nifty can find support at 23,050 followed by 22,950 and 22,800. On the higher side, 23,250 can be an immediate resistance, followed by 23,350 and 23,500," Hardik Matalia, Derivative Analyst at Choice Broking said. "The charts of Bank Nifty indicate that it may get support at 48,500 followed by 48,200 and 47,800. If the index advances further, 48,900 would be the initial key resistance, followed by 49,200 and 49,500," he added.

Wipro, UltraTech Cement, Trent, M&M, and Tech Mahindra were the major gainers on the Nifty. HUL, Axis Bank, SBI, Nestle India and BPCL fell the most on the index.

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