Sensex off day's highs, Nifty below 23,350 as FMCG, pharma stocks fall; Adani shares gain

Markets extend gains for a third straight session

Benchmark indices Nifty and Sensex continued to trade in the positive, albeit off highs, in the afternoon on January 16 after a selloff in FMCG and pharma stocks intensified. Meanwhile, Adani Group stocks rallied after the US-based short seller, Hindenburg Research whose scathing reports on the conglomerate wiped billions from its value, officially disbanded.

Markets continued their upward momentum for the third consecutive session, fueled by a positive shift in investor sentiment after US inflation data for December came in cooler than expected. Additionally, strong earnings from major US banks further bolstered the upbeat mood across global markets.

At noon,  the Sensex was up 261.44 points or 0.34 percent at 76,985.52, and the Nifty was up 85.95 points or 0.37 percent at 23,299.15. About 2591 shares advanced, 801 shares declined, and 87 shares unchanged.

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"Macro indicators from the US suggest that Trump trade has peaked. The decline in US bond yields and the dollar index are indications of this. This downshift in the dollar index and bond yields has been assisted by the lower-than-expected CPI inflation in the US, again igniting hopes of more rate cuts by the Fed this year. The cease-fire in Gaza is another major relief," V K Vijaykumar, Chief Investment Strategist at Geojit Financial Services, said.

He added that a relief rally in India is certainly on the cards, but the sustainability of the rally will depend on the Indian macros, particularly the revival of GDP and earnings growth. Budget expectations can aid a rally in the market but it will soon give way to the trends in GDP and earnings growth.

Also read: MC Markets Poll: Trump not really bad news for India, say experts; 71% say policies will help India’s growth

Paytm shares with gains of as much as 6 percent on Thursday, January 16. The upmove in the stock price came after brokerage firm Emkay Global upgraded Paytm to 'Buy' from its earlier rating of 'Add'. The brokerage said that the recent NPCI approval has released a major regulatory overhang. This should help Paytm rebuild its MTU (Monthly Transacting Users) base over the next 12 to 18 months.

HDFC Life Insurance emerged as the star performer of the day, soaring 10 percent to hit the upper circuit after delivering a stellar December quarter that surpassed market expectations with impressive earnings growth. This strong showing has bolstered confidence among foreign and domestic brokerages, keeping their outlook on the stock optimistic. Notably, Nomura, which had previously downgraded HDFC Life to "Neutral" in Q2 FY25 due to concerns over surrender value impact, slowing growth, and steep valuations, has reversed its stance, upgrading the stock to "Buy."

Shares of L&T Technology Services zoomed as much as 10 percent on January 16 as investors lapped up the stock following its healthy Q3 earnings. The information technology company reported a near 1 percent sequential rise in its net profit for the December quarter to Rs 322.40 crore. Revenue also grew 3.1 percent to Rs 2,653 crore in the October-December period, up from Rs 2,572.9 crore in the preceding quarter.

The broader market, represented by mid-smallcap indices, mirrored positive trends with gains of 1.3 and 1.7 percent. However, most market experts believe that the space could witness more pain as valuations remain uncomfortable amid uncertainty of third-quarter earnings.

Read more: Banks' Q3FY25 Outlook: Brokerages see weak earnings amidst slow loan growth, pressure on NIMs

Sectoral indices painted a mixed picture today, with Nifty PSU Bank emerging as a standout performer, climbing over 3 percent, driven by gains in heavyweights like SBI. The broader Nifty Bank index followed suit, trading over 1 percent higher as HDFC Bank, ICICI Bank, and Axis Bank traded firmly in the green. Metal stocks shone brightly, with leaders like Adani Enterprises, Vedanta, and Hindalco propelling the sector upward. Nifty Realty rallied nearly 2 percent while the Auto index was just shy of rising 1 percent led by Maruti Suzuki, Bajaj Auto, and Tata Motors.

However, Nifty Pharma and FMCG indices lagged, trading in the red, reflecting a cautious tone in these defensive sectors.

"The trend-deciding level for the day is 23,218. If Nifty trades above this level, we may witness a further rally up to 23,289-23,365-23,436 levels. However, if it trades below 23,218 levels, we may witness profit booking in the market, and it may correct up to 23,142-23,071-22,995 levels," Axis Securities said in a note.

"For Bank Nifty, the trend-deciding level for the day is 48,786. If Bank Nifty trades above this level, we may witness a further rally up to 49,049-49,347-49,611 levels. However, if it trades below 48,786 levels, we may witness profit booking in the market, and it may correct up to 48,488-48,225-47,927 levels," the brokerage added.

HDFC Life Insurance, SBI Life Insurance, Shriram Fiance, BEL, and IndusInd Bank were the major gainers on the Nifty. Trent, Tata Consumer Products, HCL Tech, Wipro and Dr Reddy's were the major laggards on the index.