Sensex, Nifty Rise Ahead of Fed Decision; IT and Banking Stocks Drive Gains

India's benchmark indices opened on a positive note on January 29, buoyed by anticipation surrounding the U.S. Federal Reserve's interest rate decision later in the day and the upcoming Union Budget over the weekend. Gains in IT and banking stocks propelled the Nifty 50 higher.

At 9:16 AM IST, the Sensex was up by 287 points (0.4%) at 76,188, while the Nifty rose 76 points (0.3%) to 23,033. Market sentiment was largely optimistic, with 1,392 stocks gaining, 802 declining, and 123 remaining unchanged.

"Most traders, particularly short-term ones, are adopting a cautious stance. Even investors are displaying restraint. Given the current scenario, one must either remain on the sidelines or maintain strict stop-loss strategies," remarked Kranthi Bathini, Director - Equity Strategy at WealthMills Securities.

Foreign institutional investors (FIIs) have collectively sold Indian equities worth over ₹79,000 crore in January. "Concerns over high valuations and disappointing earnings continue to weigh on FIIs. However, an improved growth outlook in the near to medium term could encourage them to make a comeback," Bathini added.

Despite recent recoveries, both the Nifty 50 and BSE Sensex remain approximately 12% below their all-time highs. The indices are currently on course for their longest monthly losing streak in 23 years, dragged down by weak corporate earnings, persistent FII sell-offs, and broader economic uncertainties.

In the broader market, the BSE Midcap and Smallcap indices outperformed the benchmarks, each rising by 0.7%.

Meanwhile, ITC Ltd.'s demerged hospitality unit, ITC Hotels, is set to debut on the stock exchanges today. The conglomerate opted to spin off its hotel business into a separate listed entity to enhance shareholder value. Under the demerger arrangement, investors holding 10 shares of ITC as of January 6, 2025, will receive one share of ITC Hotels. Post-listing, ITC Hotels will remain in all NSE and BSE indices at a fixed price for three trading days. If the stock hits circuit limits, the removal will be deferred by two additional trading sessions each time.

On the technical front, Hardik Matalia, Derivative Analyst at Choice Broking, identified 23,000 as an immediate resistance level, with a stronger barrier at 23,200. "Given the prevailing volatility, traders should remain cautious, implement strict stop-loss measures, and refrain from carrying long positions overnight to manage risk effectively," he advised. On the downside, he warned that sustained selling below 22,800 could trigger further declines, possibly dragging the Nifty toward the 22,500–22,000 zone.

Overnight, Wall Street witnessed a strong rebound, led by AI-driven tech stocks. The Nasdaq surged 2%, fueled by a 9% recovery in Nvidia, which had previously suffered a record $593 billion market cap decline in a single session. Apple rose nearly 4% ahead of its earnings announcement this week, while investors awaited quarterly results from Microsoft and other major tech players.

In the Asia-Pacific region, stock markets in Japan and Australia mirrored Wall Street's positive momentum with early gains. Meanwhile, trading remained suspended in Taiwan, South Korea, Hong Kong, and China due to the Lunar New Year holidays.