Sensex Up 800 Points, Nifty Crosses 23,300 as Metals & IT Rally

resr 5paisa Research Team

Last Updated: 24th January 2025 - 05:20 pm

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Benchmark indices Nifty and Sensex experienced a strong upward movement, trading firmly in positive territory, primarily driven by a surge in IT and metal stocks. However, the pharma and auto sectors remained weak. This marks the third consecutive trading session of gains for the key indices.

On the global front, the Bank of Japan raised interest rates by 25 basis points to 0.5% on Friday, reaching its highest level since 2008 as part of its monetary policy normalization efforts. Meanwhile, the US benchmark S&P 500 closed at a record high, with other major indices extending their winning streak for a fourth consecutive session after US President Donald Trump advocated for lower interest rates and reduced oil prices.

At midday, the Sensex climbed 409.43 points (0.54%) to reach 76,929.81, while the Nifty advanced 124.50 points (0.54%) to 23,329.85. Despite the gains, market breadth remained negative, with 1,243 stocks advancing, 2,085 declining, and 103 unchanged.

According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the strength in US markets, coupled with the S&P 500 hitting another record high and the 10-year US bond yield holding firm at around 4.65%, will continue to influence the Indian market. He noted that foreign institutional investors (FIIs) are likely to persist in selling, exerting pressure on large-cap stocks, particularly in the banking sector. Vijayakumar highlighted an imbalance in the market, where large caps, especially in banking, remain fairly valued or even undervalued, while the broader market appears excessively priced. He suggested that this disparity would need to correct itself eventually.

The Indian market remains under pressure due to relentless foreign portfolio investor (FPI) selling, slowing economic growth, and underwhelming corporate earnings. FPIs offloaded over ₹5,000 crore in the cash market just yesterday, pushing cumulative outflows for the month to a staggering ₹66,321.65 crore, according to Moneycontrol data.

Following a strong performance in the previous session, the broader market, represented by mid- and small-cap stocks, turned negative. The mid-cap index declined by 0.5%, while the small-cap index slipped 1.2%. On January 22, both indices had plunged by 2%. Market experts anticipate continued volatility and uncertainty in this segment.

Among sectoral indices, Nifty IT was the top performer for the third straight session, driven by gains in Infosys, TCS, Wipro, Coforge, and Persistent Systems. Strong corporate earnings and attractive valuations fueled the rally in tech stocks. The metal index followed suit, supported by Tata Steel, Vedanta, and JSW Steel. Bank Nifty also posted gains, with HDFC Bank and ICICI Bank leading the rise. On the other hand, Nifty Pharma was the worst performer, slipping over 1% due to a drop in Dr. Reddy’s shares after mixed analyst ratings following a weak Q3 performance. Nifty Energy, Auto, and Realty indices also fell by 0.4% each.

Paytm shares rebounded slightly after plunging over 8% in January 24 trading, following reports of an Enforcement Directorate (ED) probe linked to a cryptocurrency scam. Moneycontrol had earlier reported that Paytm, along with Razorpay, PayU, Easebuzz, and other payment gateways, is under investigation, with ₹500 crore frozen in connection with the HPZ Token scam, allegedly operated by Chinese nationals. Indus Towers witnessed a 2% rise in the morning session after posting better-than-expected Q3 earnings. The company reported a consolidated net profit of ₹4,003 crore, a 159.9% jump from ₹1,541 crore in the same quarter last year, supported by strong collections from Vodafone Idea and robust tower additions.

Mankind Pharma shares fell nearly 6% after reporting a 16% YoY decline in its Q3 net profit, which dropped to ₹385 crore. The company’s earnings were affected by rising expenses and the $1.6 billion acquisition of Bharat Serums and Vaccines (BSV), which was completed in October.

According to Anand James of Geojit Financial Services, the market's failure to sustain momentum after two consecutive days of gains suggests that a breakout from the current range may take longer. He predicted volatility between 23,000 and 23,400, with bullish sentiment likely to persist above 23,155. However, he warned that positivity could fade beyond 23,300 but may revive if the index pushes above 23,440. Conversely, a drop below 23,155 could give bears an edge, though strong support is expected around 23,050-22,980.

The top gainers in the Nifty included JSW Steel, Power Grid Corp, Hindustan Unilever (HUL), Tata Steel, and Grasim, while the major laggards were Dr. Reddy’s, IndusInd Bank, Apollo Hospitals, Trent, and Mahindra & Mahindra (M&M).

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