Sensex rallies 450 pts, Nifty above 23,300 ahead of Trump inauguration; Bank Nifty surges 2%

Kotak Mahindra Bank, Wipro, Bajaj Finance, Bajaj Finserv and NTPC were the major gainers on the index.

Benchmark indices Nifty and Sensex sustained their upward momentum on January 20, buoyed by strong gains in public and private sector banks, which emerged as top performers. However, the rally faced some resistance from Nifty FMCG and Auto stocks, which continued in the red, Kotak Mahindra Bank and Wipro were the major stars of the session, pleasantly surprising investors with their Q3 results.

In the broader market, mid- and small-cap indices added to the day’s optimism, rising 1.1 and 0.9 percent, respectively, after starting the session in the red. Despite the day’s gains, both indices remain well below their September highs, with the Midcap index down 12 percent and the Smallcap index shedding 11 percent since their peaks. Individual stocks have seen steeper corrections, with declines of 25-40 percent.

At close, the Sensex was up 454.11 points or 0.59 percent at 77,073.44, and the Nifty was up 141.55 points or 0.61 percent at 23,344.75. About 2,399 shares advanced, 1,492 shares declined, and 160 shares unchanged.

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"The markets are currently in an oversold zone, but the uptrend appears to be a temporary bounce rather than a sign of any significant change. Earnings remain mixed, offering no clear direction, while FIIs continue to sell, keeping sentiment subdued. Any meaningful recovery would require decisive cues from sectors rather than individual stocks," Ajit Mishra, Senior Vice President of Religare Broking said in an interaction with Moneycontrol.

He added that in the broader market, valuations in mid-cap and small-cap stocks remain stretched above long-term averages, suggesting room for further decline. Investors should adopt a stock-specific approach, focusing on strong businesses rather than expecting broad-based participation.

In the short term, a shift in FII stance or a pre-budget rally driven by short covering could provide a trigger. Banking has shown resilience and could lead the way, but the absence of IT support may limit gains. Key earnings from ICICI Bank and HDFC could also shape market direction. Overall, the market remains challenging and requires cautious navigation.

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Nifty Bank and PSU Bank indices were the stars of the show, rising 1.6 and 2.3 percent, respectively. This was largely driven by a sharp uptick in Kotak Mahindra Bank's solid Q3 earnings show. The Metal index followed suit, rising over 1 percent as Vedanta, Adani Enterprises and JSW Steel lifted the index. IT index also advanced, supported by Wipro's strong Q3 earnings. Oil and Gas and consumer durable stocks also rose while realty and pharma gained up to 0.8 percent. However, Nifty Auto and FMCG indices lagged, trading marginally in the red.

Shares of Bharat Dynamics climbed nearly 5 percent to Rs 1,345 on January 20, marking a 1-month high and extending their winning streak to three sessions. The company recently signed a Rs 2,960 crore contract with the Defence Ministry to supply Medium-Range Surface-to-Air Missiles (MRSAM) for the Indian Navy. The MRSAM system is a standard feature on multiple Indian Naval Ships and is planned to be installed on most future platforms.

Kotak Mahindra Bank was the top gainer on the Nifty,  rising over 9 percent after it bagged a slew of upgrades from broking houses as analysts turned bullish following its positive earnings show. It reported a 10 percent rise in its net profit at Rs 4,701.02 crore for Q3FY25, compared to Rs 4,264.78 crore in the year-ago period, the lender said in an exchange filing.

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Tech major Wipro shares also gained 6.5 percent after it delivered better-than-expected earnings for Q3, marked particularly by its continued margin improvement despite a seasonally weak quarter. The company's operating margins, which came at a three-year high in Q3 have garnered positive views from brokerages, with some upgrading their estimates for the IT player.

"The trend-deciding level for the day is 23,199. If Nifty trades above this level, we may witness a further rally up to 23,297-23,390-23,489 levels. However, if it trades below 23199 levels, we may witness profit booking in the market, and it may correct up to 23,105-23,007-22,913 levels," Axis Securities said in a note. For Bank Nifty, the trend-deciding level for the day is 48,632. If Bank Nifty trades above this level, we may witness a further rally up to 48,955-49,370-49,693 levels. However, if it trades below 48,632 levels, we may witness profit booking in the market, and it may correct up to 48,218-47,895-47,480 levels.

Kotak Mahindra Bank, Wipro, Bajaj Finance, Bajaj Finserv and NTPC were the major gainers on the index. Shriram Finance, SBI Life Insurance, Trent, Adani Ports, and HDFC Life Insurance were the major losers on the index.

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