The Sensex and Nifty closed at day's high, extending their winning streak for the second session, ahead of the highly anticipated Federal Open Market Committee's interest rate decision later on January 29. The rally was powered by strong gains in banking and IT stocks. Barring Nifty FMCG, which dipped 0.4 percent, the remaining 12 sectoral indices closed in the green.
At close, Sensex was up 654 points or 0.9 percent at 76,555 and Nifty was up 206 percent or 0.9 percent at 23,163. On the NSE, 2,152 stocks gained, while 406 ended in the red.
"Any movement in global markets would depend on whether the FOMC changes its language from the December statement, but no rate changes are expected. Therefore, the FOMC decision won't likely have a significant impact on the market tomorrow," said Rohit Srivastava, Market Strategist & Founder of Indiacharts.
According to Srivastava, the market's attention is now on the budget. "While some announcements may benefit certain sectors, it's unlikely to be a highly positive budget. The positive takeaway could be that maintaining fiscal prudence brings the possibility of a rate-cutting cycle closer."
Nifty Bank extended its 1.7 percent gain from the previous session, rising another 0.6 percent today, after the Reserve Bank of India (RBI) announced measures to inject liquidity into the banking system. These measures, including bond purchases and dollar/rupee swaps, are seen by analysts and traders as a potential precursor to a rate cut next month. The RBI's actions, expected to inject $17.39 billion into the system, follow months of a cash crunch that had driven up overnight and short-term lending rates.
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The Nifty IT index snapped a two-day losing streak, surging 2.5 percent 29 as global tech stocks staged a comeback. A dramatic rebound in Nvidia and AI-linked shares lifted the Nasdaq by 2 percent overnight, with Nvidia alone clawing back 9 percent after its historic $593 billion single-session wipeout. Apple also jumped nearly 4 percent as investors braced for earnings from Big Tech heavyweights this week.
Technology stocks led gains in Asia-Pacific as well today, tracking advances on Wall Street as investor angst ebbed over the emergence of a low-cost Chinese AI model, DeepSeek, that some see rivalling U.S. dominance of the industry.
Analysts believe that IT's strong performance in tech stocks today is likely just a bounce after a sharp sell-off globally. "The news that caused the sell-off is still present, and the structural changes in the industry, particularly around valuations, will continue to impact the sector. It's too early to get overly optimistic about IT stocks," Srivastava said.
The broader market outperformed the benchmarks, with both BSE Smallcap and BSE Midcap snapping a three-day losing streak and rising 3 percent each.
Trent, Shriram Finance, Bharat Electronics, Tata Motors, and SBI Life were the top gainers on the Nifty 50, rising 3-4 percent. On the flip side, Maruti Suzuki, Bharti Aitrtel, Britannia, Asian Paints, and ITC were the biggest losers, dropping 0.5-1 percent.
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Shares of Shriram Finance gained over 4 percent after the company reported a robust financial performance for Q3FY25, with net profit surging 96 percent year-on-year to Rs 3,570 crore, boosted by a one-time post-tax gain of Rs 1,489 crore from a stake sale in its housing finance subsidiary.
JSW Energy shares slid 6 percent after reporting a decline in third-quarter profit due to weak power demand.
ITC attracted attention as well, with its spin-off subsidiary ITC Hotels listing at a discovery price of Rs 180 per share on the NSE today. This IPO-less listing marked a nearly 31 percent discount from its implied price of Rs 260 per share, following the demerger of the hotel business. Last year, ITC decided to spin off its hotel segment into a separate listed entity to unlock value for shareholders, with a demerger ratio set at 1:10. Shareholders holding 10 shares of ITC as of January 6, 2025, will receive one share of ITC Hotels post-demerger.
"From a technical perspective, the Nifty rebounded strongly from its key support at 22,800 and managed to close above the 23,100 level, which holds significance as monthly support," said Mandar Bhojane, Equity Research Analyst at Choice Broking.
Bhojane said that if Nifty sustains above 23,300 in the coming sessions, the index may extend its upside towards 23,650 and 23,800. "Conversely, 22,800 will act as immediate and crucial support, and a break below this level may lead to increased downside pressure."
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