Sensex jumps 450 pts, Nifty above 23,700 as energy, PSU bank stocks rally; broader market outperforms

ONGC, Titan Company, Tata Consumer Products, BPCL, and Shriram Finance were the top gainers on the Nifty.

Benchmark indices Nifty and Sensex snapped their two-day losing streaks on January 7, helped by energy and PSU bank stocks. Given the upbeat sentiment in opening trade, all sectors traded in the positive. Meanwhile, the broader market rallied over a percent each to outperform the frontline indices.

This comes just a day after Indian equity markets witnessed a bloodbath at the start of the week, as the benchmark indices shed 1.5 percent on January 6 amid fears about Human Metapneumovirus (HMPV) weighing on investor sentiment.

At about 9:30 am, the Sensex was up 445.96 points or 0.57 percent at 78,410.95, and the Nifty was up 162.00 points or 0.69 percent at 23,778.05. About 2,278 shares advanced, 699 shares declined, and 113 shares unchanged.

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"I anticipate continued volatility in Indian markets over the next couple of weeks, driven by global and domestic factors. While upcoming quarterly earnings will shape investor sentiment, two major global events—the uncertainty surrounding a new virus scare and the implications of Japan's yen trade—pose broader risks to the market," Aishvarya Dadheech, Founder and CIO of Fident Asset Management said in a conversation with Moneycontrol.

He believes retail investor panic due to virus-related news may have been an overreaction, as no conclusive evidence suggests a significant threat. A rising dollar index, currently near 108, remains a critical concern for emerging markets, including India. Strengthening of the dollar, coupled with climbing crude oil prices—up from $70 to around $77 per barrel—could pressure India’s currency and equity markets further.

Also read: Jefferies downgrades Zomato to 'hold', cuts price target by 18% as quick commerce battle heats up

The analyst also highlighted that the 20th January announcement of U.S. policies under Trump’s administration could exacerbate dollar strength, adding to equity market challenges globally. For now, the market is expected to oscillate between strong and weak days, with no decisive direction until quarterly earnings results offer a clearer cue.

Among sectoral indices, Nifty Energy was the top gainer, rising over 1 percent after ONGC, Oil India and Coal India rallied. The Nifty PSU Bank index closely followed, rising almost 1 percent. Sharp gains in SBI, PNB and Bank of Baroda lifted sentiment. Nifty Bank, FMCG, Pharma and Realty traded in the range of 0.5 percent.

The broader market, encapsulating the mid and small cap indices, mirrored positive trends following a sharp fall of about 3 percent in the last two trading sessions. The two rose 1.1 and 1.2 percent, respectively. In 2024, Nifty Smallcap 100 and Nifty Midcap 100 indices surged over 20 percent each to outpace Nifty's 9 percent gain.

ONGC share prices rallied over 3 percent after the oil marketing major bagged an upgrade from Hong Kong-based brokerage CLSA. The brokerage upgraded ONGC shares to 'High Conviction Outperform' from 'Outperform' earlier, raising its price target to Rs 360 per share. This indicates an upside of around 42 percent. CLSA raised its EPS estimates by 2-8 percent over FY25-27.

Read more: FIIs extend selling spree in oil, auto, power, FMCG sectors in December

Global brokerage firm Jefferies has downgraded shares of Zomato to a 'hold' call, citing the sharp run-up in the stock through 2024 and concerns over rising competition in the quick commerce space. After Zomato’s shares more than doubled in value in 2024, analysts at Jefferies predict that 2025 could be a breather year, with the stock likely shifting gears into a phase of price consolidation. Zomato shares traded 4.5 percent lower.

Biocon shares rallied 4 percent after Jefferies upgraded its rating on drugmaker to 'underperform' citing positive newsflow around the regulatory approval of its Bengaluru manufacturing unit. Building on the optimism, Jefferies also lifted its price target for the stock by a whopping 43 percent to Rs 400, translating into an upside potential of around 12 percent from Monday's closing price.

"The Nifty's drop yesterday, which accelerated courtesy of the HMPV cases detected in Karnataka, was the worst single-day fall since October 3. The drop has seriously weakened the entire recovery from the December 31 lows of 23,460 so for the day, bulls have to protect 23,500 if they are to have any chance of a rebound," Akshay Chinchalkar, Head of Research at Axis Securities said. "Bears have the upper hand till 24060 remains intact, but more immediate resistance lies near 23800. On the other hand, a break below 23,500 will again bring the focus back on the Nov lows near 23,260," he added.

ONGC, Titan Company, Tata Consumer Products, BPCL, and Shriram Finance were the top gainers on the Nifty. Apollo Hospitals, M&M, Bajaj Auto, Axis Bank and Tata Motors were the major laggards.