In early Tuesday trade, the Indian stock market saw a robust rally, with the Sensex and Nifty 50 indices gaining almost 1%. This surge was driven by substantial increases in IT and banking stocks. The Sensex jumped over 600 points, opening above the 72,000 level, while the Nifty 50 started 145 points higher, surpassing the 21,700 mark.
The broader markets contributed to the upswing, with both the Nifty Midcap 100 and Nifty Smallcap 100 indices showing positive movements.
The surge in domestic equities can be attributed to favorable global market trends and improved corporate earnings for the December quarter.
"In the short term, market sentiment plays a more significant role than other factors. Currently, global and Indian sentiments are positive. The international market, especially the S&P 500 reaching a record high at 4,850, provides strong sentiment support. Additionally, the historic mega event of Pran Prathishta at Ayodhya has significantly boosted national sentiments. These positive factors bode well for the market in the short run. The Q3 results will have varying impacts on specific stocks, both positive and negative," stated VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Nevertheless, he cautions investors to recognize that the impact of sentiment is typically short-lived.
"While there is optimism, it's crucial for investors to exercise caution due to serious concerns in West Asia and the Red Sea. The market could be significantly affected if something goes awry, given the currently high valuations," he emphasized.
The positive momentum in global markets has provided support to domestic equities. On Tuesday, Asian markets showed upward trends, and the US stock market recorded gains, particularly in technology stocks. The S&P 500 achieved a consecutive record high close, while the Dow Jones Industrial Average surpassed the historic milestone of 38,000 for the first time as the fourth-quarter earnings season gained momentum.
Meanwhile, Japanese shares reached fresh 34-year highs following the Bank of Japan's decision to maintain its ultra-loose monetary policy. The Nikkei in Japan rose by 1%, reaching its highest level since February 1990, with year-to-date gains reaching 10.3%, as reported by Reuters.
The MSCI's broadest index of Asia-Pacific shares outside Japan increased by 0.5%, with Hong Kong's Hang Seng index leading the gains with a significant 1.8% surge, rebounding over 3% following two consecutive days of declines.
The Chinese stock market experienced a rally in response to Bloomberg news, which indicated that state authorities were contemplating a set of measures to stabilize the declining market. Chinese policymakers are reportedly planning to mobilize around 2 trillion yuan ($278.53 billion), primarily sourced from offshore accounts of Chinese state-owned enterprises. This fund would be utilized as part of a stabilization initiative to purchase shares onshore through the Hong Kong exchange link, as per Bloomberg News.
Notable contributors to the Nifty 50 index included heavyweight companies such as ICICI Bank, Bharti Airtel, Infosys, Tata Consultancy Services (TCS), Sun Pharmaceutical Industries, and Cipla.
Investors were uplifted by the positive December quarter earnings from major companies such as ICICI Bank and Cipla. The banking giant saw a robust surge of over 5%, while the pharmaceutical major recorded an impressive increase of more than 7% following the release of their Q3 results, thereby lifting the benchmark indices.
Commenting on ICICI Bank's performance, Vijayakumar remarked, "ICICI Bank’s results are outstanding, surpassing market expectations. With strong indicators in credit growth, net profit growth, and asset quality, the stock is poised to lead the surge in large caps."
On January 20, the Bank Nifty index established a higher low on the daily chart while maintaining the immediate support zone of 45,700-45,600. Breaking the immediate resistance at 46,300, it reached a high of 46,580.30 on Tuesday. Analysts believe that this breakthrough could trigger short-covering, potentially propelling it towards levels of 46,500 / 46,800.
Disclaimer: The opinions and suggestions expressed above belong to individual analysts or brokerage firms. Investors are advised to consult certified experts before making any investment decisions.
