Mid, smallcap indices surge 2.5%, led by PSU bank, metal stocks; Sensex, Nifty snap four-day losing streak

Adani Enterprises, Adani Ports, NTPC, Hindalco and Tata Motors were the top gainers on the Nifty.

Benchmark indices Nifty and Sensex snapped four-day losing streak by ending the session with decent gains, albeit off highs, after a sharp rally in banks, metal and energy stocks bolstered sentiment on January 14. Meanwhile, the selloff in IT and FMCG stocks kept investors on edge. Big technology names such as HCL Tech tanked 10 percent following muted guidance during its Q3 results last night.

However, the broader market, comprising the mid-small cap indices, attracted buying interest with gains of nearly 2.5 and 2 percent, respectively. Amid fears of stretched valuations and the overall negative sentiment prevailing in the market, the two have had a torrid start to the year, falling nearly 10 percent.

At close, the Sensex was up 169.62 points or 0.22 percent at 76,499.63, and the Nifty was up 90.10 points or 0.39 percent at 23,176.05. About 2,752 shares advanced, 1,049 shares declined, and 103 shares unchanged.

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"The rally was supported by positive global cues and a pullback. The Nifty held the crucial 23,000 level, while a broad-based rally improved market sentiment, reflected in a healthy advance-decline ratio," Kranthi Bathini, Director of Equity Strategy at WealthMills Securities said in an interaction with Moneycontrol.

He added that a decline in food inflation provided some comfort, but uncertainties like rising crude prices and rupee depreciation could limit the Reserve Bank of India's scope for a rate cut.  Foreign institutional investors (FIIs) have been selling due to a strengthening dollar and rupee depreciation, leading to outflows across emerging markets, including India. However, the selling may ease as the pace has moderated compared to earlier months.

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Among sectoral indices, Nifty IT was the major laggard with losses of over 2 percent. This comes following HCL Tech's Q3 disappointed investors. Nifty FMCG also slipped 1 percent led by HUL, Nestle and Britannia. Nifty Metal rallied almost 4 percent after gains from Hindalco, Adani Enterprises and JSW Steel lifted the index. Nifty Realty, which crashed 6 percent yesterday, gained over 1 percent on January 14. Nifty Auto rallied over 2 percent led by gains in M&M, Maruti Suzuki and Tata Motors. Nifty Bank also witnessed a sharp rise of 1.6 percent in the afternoon led by HDFC Bank, ICICI Bank, and SBI.

Shares of REC and Power Finance Corporation climbed as much as 8 percent in morning trade on January 14 after JSW Energy emerged as the winning bidder for KSK Mahanadi Power under the Insolvency and Bankruptcy Code. This news also brings relief to the creditors of KSK Mahanadi Power, which includes state-owned REC and PFC.

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Adani Group stocks rallied as much as 17 percent amid high volumes. Adani Power, Adani Green Energy, Adani Energy Solutions, Adani Total Gas, and Adani Enterprises have surged between 5 percent and 12 percent. Additionally, Adani Ports and Special Economic Zone, ACC, and Ambuja Cements have gained between 2 percent and 3 percent.

HCL Tech shares plunged nearly 9 percent after brokerages remained on the sidelines after industry major HCLTech's Q3 earnings, though in line with expectations, failed to deliver upside triggers. While the management commentary over deal wins remained upbeat, the marginal revision in revenue growth guidance hinted at a weaker Q4 for HCLTech, leaving brokerages disappointed.

"Key support is seen in the 22,830 - 23,000 range, with several near-term time cycles aligning between January 17 and 23. Resistance lies in the 23,450 - 23,500 zone, as prop oscillators remain bearish on both daily and weekly charts," Akshay Chinchalkar, Head of Research at Axis Securities, said. "However, with only 11 percent and 13 percent of stocks in the NSE500 above their 50-day and 100-day moving averages, downside extremes are being tested, suggesting a potential short-covering rally may be near, especially as a time-reversal zone approaches, " he added.

Adani Enterprises, Adani Ports, NTPC, Hindalco and Shriram Finance were the top gainers on the Nifty. Laggards included HCL Tech, HUL, Apollo Hospitals, Titan Company, and TCS were the major laggards.

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