Sensex and Nifty surged for the fourth straight session, rising over 1 percent on January 31, fueled by pre-Budget optimism. All 13 sectoral indices were in the green, with FMCG, financials, and auto stocks rising 0.5-2 percent, pulling the Nifty higher.
At close, the Sensex was up 740 points or 1 percent at 77,500, and the Nifty was up 259 points or 1.1 percent at 23,508. About 2,635 shares advanced, 1,131 shares declined, and 120 shares were unchanged. Still, the indices remain 10.5 percent below their all-time highs from September 27, 2024. Slowing economic growth, weaker corporate earnings, and elevated U.S. Treasury yields have triggered massive FII outflows—Rs 86,100 crore worth of Indian equities offloaded so far in January, making it the second-highest monthly outflow on record.
"The recent uptrend has been driven by both short covering and optimistic sentiment around the Union Budget. However, rollover data suggests no strong bullish bets have been placed," said Osho Krishnan, Technical and Derivative Analyst at Angel One.
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Although the Economic Survey 2025 has provided a sentimental boost, contributing to today's gains, it isn't the sole driver of the rally, two analysts told Moneycontrol. The Economic Survey projects India's GDP growth at 6.3- 6.8 percent for FY26.
As the Union Budget 2025 approaches on February 1, markets are bracing for volatility, but with a bullish tilt.
Krishnan said that the market remains in an oversold zone, which could lead to mixed trading on Budget day, especially in the broader indices, but benchmark indices are likely to maintain a positive bias.
"Market volatility is expected, with a key focus on whether the government commits to front-loading CAPEX in the first half of the next fiscal year," said Swapnil Shah, CIO at Fort Capital. "CAPEX spending from April to November had declined by over 10 percent and any signals of acceleration would be well received. Markets are also watching for renewed momentum in ongoing reforms, which have slowed due to elections."
Today, the broader market outperformed the benchmarks, rising nearly 2 percent each. "However, given muted Q3 FY25 earnings and a cautious outlook for the next results season, a broad-based rally in mid- and small-cap stocks remains uncertain at this stage," said Shah.
"The mid and small-cap indices have retraced nearly 50 percent on the Fibonacci series but are facing resistance at the 20-day exponential moving average. Until they break above this level, sideways to bearish movement is possible," Krishnan noted.
Tata Consumer, Bharat Electronics, Nestle, Trent, and L&T topped the Nifty 50 gainers, rising 4-6 percent, while Bharti Airtel, Bajaj Finserv, ICICI Bank, JSW Steel, and Bajaj Finance lagged, slipping 0.3-1 percent.
Tata Consumer shares jumped over 6 percent, despite posting a smaller-than-expected third-quarter profit, thanks to growth in its tea, salt, and international segments. Shares of Navratna defence company Bharat Electronics climbed 2 percent after reporting strong Q3 results, complemented by an equally optimistic management commentary that received praise from brokerages. Nestle India, the maker of Maggi instant noodles, saw its shares rise over 4 percent after posting a net profit of Rs 696 crore in Q3 FY25, up 6 percent from Rs 655.6 crore a year ago. Infrastructure bellwether Larsen & Toubro rose 4 percent as its orders hit an all-time high, driven by strong international business performance.
Shares of Ola Electric Mobility surged 12 percent after data revealed the company gained market share in January. The stock is now hovering near its IPO price of Rs 76. According to VAHAN data, Ola Electric's market share at the end of January stood at 30 percent, up from 19 percent last month. Navin Fluorine International saw a 6 percent spike in shares following a standout performance in the December quarter. Global brokerage UBS has raised its price target to Rs 4,850.
Meanwhile, shares of Jindal Steel & Power tumbled 6 percent after the company reported its December quarter results. The company's revenue remained flat year-on-year, while profit plummeted by 50 percent. Additionally, margins contracted by nearly 600 basis points compared to the same period last year. Bank of Baroda shares fell over 4 percent, likely pressured by declining net interest margins.
When it comes to technicals, Jatin Gedia, Technical Research Analyst at Sharekhan, said that Nifty faces immediate resistance at 23,574-23,600. "On the downside, Nifty 50 is expected to find strong support at 23,300, which aligns with its 20-day moving average," he said.
For Budget Day, Gedia anticipates a trading range of 23,300-23,700 for Nifty. "Since the Nifty closed above 23,500 today, the next key resistance level would be 23,700," he added.
Meanwhile, in the global market, European shares hit a record high, driven by strong performances in technology and healthcare stocks despite the U.S. tariff deadline set by President Donald Trump. However, Trump said that his administration had not yet decided whether oil imports would be included in the policy. Donald Trump has confirmed that he will impose 25 percent tariffs on imports from Mexico and Canada starting February 1.
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