Synopsis: Sensex climbed 437.73 points (0.57%) to close at 76,767.74, while Nifty gained 133.60 points (0.58%) to end at 23,219.55. Market sentiment improved as investors viewed recent corrections as excessive, with broader markets showing two advancing stocks for every one declining stock. Gains were supported by positive trends in Asian markets, including mainland China, Korea, and Hong Kong.
Indian benchmark indices Sensex and Nifty staged a recovery on Tuesday, buoyed by improved investor sentiment and favourable global market trends.
Sensex surged 437.73 points, or 0.57%, to close at 76,767.74, while Nifty advanced 133.60 points, or 0.58%, to settle at 23,219.55.
In the broader market, for every declining stock, two stocks registered gains, indicating a positive market breadth.
Global Influences and Domestic Sentiment:
Markets across mainland China, Korea, and Hong Kong displayed gains in early trading, contributing to the optimistic sentiment in the domestic markets.
Additionally, a slight dip in the US 10-year bond yield provided some relief to investors, although the dollar remained near its two-year high ahead of key CPI data.
Brent crude oil prices also edged lower, adding to the favourable environment.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “The market appears oversold, favoring a near-term bounce back. However, this trend might not sustain, with mid and small caps likely facing more challenges.”
Institutional Activity: Insights and Strategies
Institutional activity revealed a net buying spree by domestic institutional investors (DIIs), who purchased Rs. 3,174 crore more than foreign institutional investors (FIIs) sold.
Vijayakumar highlighted this as an indication of “smart money” selling, emphasizing the importance of investing in quality large-cap stocks for retail investors.
Sectoral Performance and Top Gainers:
Among the top Sensex gainers, NTPC rose 3.44% to Rs 308.50, followed by IndusInd Bank, Zomato Ltd, Tata Motors Ltd, and Adani Ports, each climbing over 3%. Bajaj Finance, State Bank of India, Tata Steel, and Bajaj Finserv also posted gains of up to 2.2%.
Conversely, the IT sector faced pressure.
HCL Technologies declined 7.84% to Rs 1,829.65 after narrowing its FY25 revenue guidance.
Analysts highlighted that HCL Tech’s valuation parity with peers like TCS and Infosys, coupled with slower ramp-up in discretionary deals, raised concerns.
This development impacted other IT stocks, with Tech Mahindra, TCS, and Infosys recording slight losses.
Analyst Recommendations: Navigating Volatility
Given the prevailing market volatility, Hardik Matalia, Derivative Analyst at Choice Broking, advised traders to “exercise caution, implement strict stop-loss measures, and avoid carrying long positions overnight.”
Economic Indicators: Inflation and RBI Policy Outlook
India’s headline inflation for December moderated to 5.22% year-on-year, driven by easing food prices.
Analysts speculated on potential RBI rate cuts, with Emkay Global suggesting that unconventional easing measures could revive credit offtake.
However, the final call would depend on evolving economic conditions and the appointment of a new Governor and MPC.
Union Budget 2025 Expectations:
Nilesh Shah, MD at Kotak Mahindra AMC, highlighted the significance of the upcoming Union Budget amid a shift from globalization to protectionism.
“The budget needs to be growth-oriented, supporting urban consumption through tax cuts, EMI subvention for low and middle-income groups, and incentives for private investment,” Shah said.
He emphasized fiscal prudence and strategic divestment of non-core PSUs to bridge fiscal gaps.
Conclusion:
Tuesday’s market rebound highlighted investors’ optimism amid global and domestic influences.
While opportunities exist in quality large-cap stocks, analysts caution against sustained volatility, particularly in mid and small caps.
With inflation moderating and the Union Budget 2025 on the horizon, market participants remain hopeful yet vigilant.
Retail investors are advised to adopt a patient and informed approach, focusing on long-term value.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
