Sensex surges 1,000 pts, Nifty reclaims 24k as auto, IT stocks bolster bullish sentiment; PSU banks suffer

Eicher Motors, Bajaj Finance, Bajaj Finserv, Maruti Suzuki and M&M were the top gainers on the Nifty.

Benchmark indices Nifty and Sensex powered ahead on January 2, riding high on the back of IT and auto stocks as bulls tightened their grip on Dalal Street. The benchmark indices extended their winning streak into a second session, carrying forward the momentum that marked a stylish start to 2025. However, PSU banks bucked the trend, sinking deep into the red.

At noon, the Sensex was up 1,000.10 points or 1.27 percent at 79,507.51, and the Nifty was up 311.30 points or 1.31 percent at 24,054.20. About 1961 shares advanced, 1418 shares declined, and 92 shares unchanged.

Follow our LIVE blog for all the latest market updates

"The Q3 corporate earnings are expected to remain subdued, leaving investors to focus on sectors that can outperform despite the slowdown. Segments like IT, pharma, and financials are likely to show resilience, while luxury consumption areas such as hotels, jewellery, and aviation could deliver strong results," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.

He added that Foreign Institutional Investors (FIIs) are expected to persist with their selling, driven by the strong dollar and attractive U.S. bond yields, which make emerging markets less appealing in the near term. Although Domestic Institutional Investors (DIIs) might offer support at lower market levels, their buying is unlikely to propel the market significantly. For a sustained upward move, the market will need clear signs of growth and an earnings recovery.

Also read: Attractive valuations, stronger earnings could see large-caps lead charge in 2025, says Canara Robeco MF

The Auto index also saw a massive uptick of 3 percent following better-than-expected December sales. Notable gainers included M&M, Maruti Suzuki, Bajaj Auto and Eicher Motors. The index is up over 3 percent in one week. The FMCG and Infra index gained in the range of 0.5 percent.

The IT index cruised 1.5 percent after CLSA and Citi said that revenue growth in the sector is likely to improve further in the December quarter and 2025. Stable demand commentary, improvement in client sentiment following the US elections and the recent sharp rupee depreciation versus the US dollar are tailwinds for earnings in the IT sector, the brokerage added.

Meanwhile, the Nifty PSU Bank index led by SBI, Bank of India and Bank of Baroda slipped 1 percent, snapping its two-day gaining streak on the bourses. Other losers included Nifty Pharma and Realty.

The small and midcap indices showcased robust trends following broad-based buying. While the midcap index traded 0.4 percent higher, the smallcap index traded 0.2 percent in the green. Several market experts say that positive earnings could help the two outperform the benchmarks.

Read more: Petronet LNG shares down 5% as Citi note mentions critical view by PNGRB on tariffs

There were a host of stocks that made headlines. Eicher Motors was the standout with gains of 6 percent after it reported a massive 25 percent increase in December sales to 79,466 units year over year. Exports recorded a 90 percent surge from the year-ago period after the company exported over 11,000 units of Royal Enfield.

Shares of Maruti Suzuki India Ltd (MSI) extended their gains for a second straight day on January 2 by rising over 3 percent following bullish management commentary on the strong car sales seen in December. Partho Banerjee, Senior Executive Officer - Marketing & Sales told CNBC-TV18 that dealer network stock is for just nine days and that the auto major has over 2 lakh pending bookings."All product segments fired on all cylinders in December, monthly household incomes are not increasing in-line with vehicle costs," said Banerjee.

Kotak Mahindra Bank's share price shot up over 2 percent after receiving an upgrade from international brokerage Citi Research on January 2. Citi Research upgraded Kotak Mahindra Bank to a 'buy', with a target price of Rs 2,070 per share, indicating an upside of nearly 16 percent from the previous session's closing price. According to the brokerage, Kotak Bank's strong loan growth momentum will continue to grow. The bank's personal loan segment is expected to gather pace, supported by improved delinquency trends, signaling healthier asset quality.

Bajaj Finance shares rallied nearly 5 percent after Citi reiterated its 'buy' call, citing stable loan growth, a positive net interest margin (NIM) bias, and only a marginal increase in credit costs. The brokerage expects credit costs for Q3 to rise slightly to 2.20-2.25 percent and forecasts AUM growth of 6 percent QoQ and 27 percent YoY, supported by growth in high-yielding segments. With the cost of funds peaking in Q2, NIMs are expected to remain favourable.

"Having achieved 23770, a consolidation is expected. A collapse is less likely, while a direct rise above 23850 could trigger a 24025 move, but not much beyond. We are yet to see evidence of momentum, keeping volatility the dominant theme," Anand James, Chief Market Strategist at Geojit Financial Services, said.

Eicher Motors, Bajaj Finance, Bajaj Finserv, Maruti Suzuki and M&M were the top gainers on the Nifty. BPCL, Sun Pharma, BEL, and Adani Ports were major laggards.