The equity benchmark indices continued their upward trend for the second day in a row, with the Sensex rising by 1,436 points to close at 79,944, and the Nifty climbing 446 points to 24,189.
Indian stock market: The equity benchmark indices continued their upward trend for the second day in a row, with the Sensex rising 1,436 points to close at 79,944, and the Nifty climbing 446 points to 24,189. Both indices saw nearly a 2% increase, fueled by robust performances in the IT and auto sectors.
During the day, the Sensex rallied above the 80,000 mark while the Nifty 50 topped 24,200 level. The 50-pack Nifty also regained important technical levels, moving above its 20-day and 50-day moving averages during the session.
Sector-wise, all indices closed higher, except for Nifty Media, with Nifty Auto leading the charge, rising nearly 4%.
Eicher Motors reached an all-time high, rallying almost 9%, while Maruti Suzuki saw its biggest single-day increase since July 2024. The Bajaj duo also saw nearly a 7% rise each, driven by a favourable outlook from brokers.
"Increased momentum was observed in the domestic market, driven by optimism about the upcoming earnings season starting next week. The rally was broad-based, with most sectoral indices posting gains. The auto sector led the way, showing the strongest momentum due to robust December sales that defied the usual subdued demand. Banking and IT stocks also performed well, as the economy bottomed in Q2," said Vinod Nair, Head of Research, Geojit Financial Services.
Here are five key factors behind the surge in frontline indices on Thursday:
1. Upbeat Global markets
US and European stock futures surged following a year-end selloff as traders returned from their New Year's Day break.
Euro Stoxx 50 and Nasdaq 100 futures both rose by more than 0.5% during Asian trading, following a period where investors had reduced their exposure to risk assets in the final days of 2024. Technology stocks could drive the gains after experiencing four consecutive days of declines up until Tuesday.
The positive sentiment in the global markets rubbed off on Indian indices too, driving them higher.
2. Robust GST Collection
The GST collection for December increased by 7.3 per cent year-on-year, reaching ₹1.77 lakh crore, indicating a recovery in consumption activities. Experts suggest this rise points to strengthening economic momentum, which may boost investor confidence.
3. Positive Q3 Earning Updates
Positive business updates for the third quarter from key sectors, including automotive and financials, have boosted expectations for Q3 earnings. Major companies such as Maruti Suzuki, Mahindra & Mahindra, and CSB Bank have shown encouraging trends, providing an optimistic outlook.
"Q3 corporate earnings are unlikely to register a rebound. This means investors have to focus on segments which will buck the slowdown like IT, pharma and to some extent financials. Luxury consumption like hotels, jewellery and aviation also are likely to post good results," Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.
4. IT & Auto Sectors Rally
On January 2, the IT sector, a major contributor to the market rally, saw its index increase by over 2 per cent while the auto sector witnessed a nearly 4 per cent surge.
Both CLSA and Citi are forecasting stronger revenue growth for IT companies in the December quarter, driven by steady demand and the recent depreciation of the rupee. Meanwhile, auto pack rallied following strong sales figures for December, prompting positive views from brokerages.
5. Bullish Technical Trends
The Nifty has moved above the 200 DMA after several failed attempts in recent sessions. "Additionally, the index has crossed above the 21 EMA on the daily timeframe, confirming a bullish trend. The RSI is also in a bullish crossover. The index appears to be a "buy on dips" candidate following a strong closing. Support is placed at 24,000, while on the higher end, it may move towards 24,500," said Rupak De, Senior Technical Analyst at LKP Securities.