India's benchmark indices extended early gains by midday on January 28, rebounding from seven-month lows seen in the previous session. The Nifty Bank index led the rally on the Nifty 50, rising nearly 2 percent, buoyed by the Reserve Bank of India's liquidity-boosting measures, which also fueled speculation about a potential rate cut in February. Meanwhile, healthcare and power stocks lagged.
Around 12 PM, the Sensex climbed over 700 points or 1 percent to 76,092, while the Nifty 50 rose 180 points or 0.8 percent to 23,000. However, market breadth remained weak, with 346 stocks advancing against 2,166 declining.
Broader indices underperformed, with the BSE Midcap and Smallcap indices falling between 1 and 4 percent. The Nifty Smallcap 250 has entered a bear market, declining 25 percent from its all-time high of 18,688.
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"After the correction the market is now trading at fair valuations which are in line with long-term (10-year) averages. Investors can utilise the opportunity to buy fundamentally strong high quality stocks. The outperformance of largecaps over mid-and smallcaps is a healthy trend," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The Reserve Bank of India announced liquidity-enhancing measures, including bond purchases and repo auctions, raising optimism for rate-sensitive sectors. Banking stocks surged, with HDFC Bank, Axis Bank, and ICICI Bank among the top Nifty 50 gainers, each rising over 2 percent. HDFC Bank's shares rose the most in eight months. LIC Housing Finance, Bajaj Finance, and M&M Financial Services also gained between 0.3 and 1.5 percent.
Realty stocks mirrored the rally, gaining over 1 percent as investors bet on lower interest rates.
SpiceJet shares rose 3 percenr as the airline announced plans to reintroduce its grounded 737 Max aircraft into service.
On the flip side, NTPC, Sun Pharma, Bharat Electronics, Power Grid, and BPCL led the laggards on the Nifty 50, shedding 2–4 percent.
Also Read | Advance-decline ratio falls to two-year low as small and mid-cap stocks lose heavy ground
Tech stocks remained in focus following the debut of DeepSeek, a Chinese AI startup offering a low-cost alternative to ChatGPT. The company's use of cheaper chips and smaller data models has raised questions about the sustainability of current AI-related demand projections.
Jefferies' Greed and Fear report responded by slashing exposure to Nvidia and TSMC by 2 percentage points and exiting ASML and Hynix entirely. The report noted that investing in AI may not be as expensive as previously thought, signaling a potential shake-up in the global semiconductor landscape.
From a technical perspective, the market continues to face selling pressure at higher levels, forming lower tops on daily charts, which is a bearish signal, according to Shrikant Chouhan, Head of Equity Research at Kotak Securities. He identified resistance at 23,000–23,050 and support zones at 22,800–22,750.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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