Indian markets rally as Sensex climbs 288 points and Nifty50 gains 122 points, tracking positive global cues
Stock Market Update – On Tuesday, January 7, 2025, Indian benchmark indices BSE Sensex and Nifty50 opened higher, mirroring overnight gains in the S&P 500 and Nasdaq, supported by positive global cues. At midday, the BSE Sensex was up 288 points, or 0.37%, at 78,253, while the Nifty50 advanced by 122 points, or 0.52%, to 23,737.45.
Among the 30-stock BSE Sensex, the leading gainers included Titan, up by 1.90%, followed by Nestle India, Power Grid Corporation, Tata Steel, and IndusInd Bank. Conversely, stocks such as Zomato, Mahindra & Mahindra, and Tata Motors traded lower. On the broader Nifty50, ONGC surged 3.11%, with Tata Consumer Products, Titan, Shriram Finance, and BPCL also registering notable gains. Declines were observed in Apollo Hospitals Enterprises, Mahindra & Mahindra, Tata Motors, Bajaj Auto, and Hero MotoCorp.
Sectoral Performance Highlights
Sectoral indices showed a mixed performance. While the Media index declined by 0.58%, Oil & Gas and Consumer Durables emerged as the top gainers, rising by 1.47% and 1.16%, respectively. Other sectors such as PSU Bank, Metal, FMCG, IT, and Financial Services also posted gains. Broader market indices mirrored the bullish sentiment, with the Nifty Midcap 100 rising by 0.63% and the Nifty Smallcap 100 advancing by 0.55%. Meanwhile, volatility eased as the India VIX fell 2.63% to 15.24.
Global Market Influence
Positive developments in global markets played a significant role in bolstering sentiment. European and US markets rose on Monday, driven by speculation that the incoming Donald Trump administration might pursue less aggressive tariffs targeting only critical sectors. Although this report was later denied by President-elect Trump as “Fake News,” it temporarily calmed investor concerns.
Asian markets also reflected the positive momentum, with Japan’s Nikkei 225 gaining 2.06% and South Korea’s Kospi advancing by 1.01%. The broad-based Topix in Japan climbed by 1.12%, and Australia’s S&P/ASX 200 rose 0.13%. However, Hong Kong’s Hang Seng Index fell 0.51%, weighed down by concerns over Chinese tech stocks. Tencent Holdings saw a 5% decline after the US Defense Department added it to a list of “Chinese military companies.”
Foreign and Domestic Institutional Activity
Foreign institutional investors (FIIs) remained net sellers, offloading Indian equities worth ₹2,575.06 crore on Monday. In contrast, domestic institutional investors (DIIs) continued to display confidence in India’s long-term economic prospects, making net purchases of ₹5,749.65 crore during the same session. The disparity between FII outflows and DII inflows underscores the differing perspectives of global and local investors.
Macroeconomic Indicators and Policy Updates
The Indian rupee weakened further, hitting a record low of ₹85.83 per dollar on Monday. State-owned banks intervened on behalf of the Reserve Bank of India (RBI) to stabilize the currency, which settled marginally higher at ₹85.78 per dollar. Rising US Treasury yields and the strength of the US dollar continued to exert downward pressure on the rupee.
The finance ministry concluded nine rounds of pre-Budget consultations on Monday, addressing proposals to boost consumption and employment. Stakeholders recommended measures such as tax concessions for individuals and MSMEs, as well as reforms to stimulate economic activity. The ministry also urged banks and NBFCs to play a more significant role in financing large-scale infrastructure projects, which are critical to achieving India’s “Viksit Bharat” ambitions by 2047.
Mutual Funds and IPO Activity
The large-cap mutual fund basket saw significant reclassification, with seven midcap stocks and four new listings earning large-cap status in the latest semi-annual review. Meanwhile, primary markets were abuzz with activity. Indo Farm Equipment Limited made its debut on the bourses, while Capital Infra Trust InvIT and Quadrant Future Tek Limited opened for subscription. The SME IPO segment also witnessed heightened activity, with Technichem Organics Limited listing and Fabtech Technologies Cleanrooms Limited closing its subscription window. Indobell Insulation Limited entered its second day of bidding.
Market Sentiment Amid Previous Volatility
Indian equity markets had witnessed their steepest single-day decline in three months during the previous session, with the Sensex tumbling by 1,258.12 points to settle at 77,964.99. The Nifty50 also fell sharply, closing 388.70 points lower at 23,616.05. The broader indices mirrored this bearish sentiment, with the Nifty Smallcap100 and Midcap100 indices losing 2.70% and 3.20%, respectively. Sectoral indices across the board posted losses, with PSU Banks being the worst-hit, declining by 4%.
Global Cues and Commodity Trends
Global stocks recovered on Monday, buoyed by easing concerns over US trade policy and strong gains in technology and communication services. The S&P 500 rose by 0.55%, while the Nasdaq advanced by 1.24%. The Dow Jones Industrial Average, however, ended marginally lower, dragged down by losses in consumer staples.
In the commodities market, Brent crude oil prices eased by 0.3% to settle at $76.30 per barrel, while WTI crude fell by 0.5% to $73.56 per barrel. Gold prices also declined, with spot gold falling 0.1% to $2,636.35 per ounce, as rising US Treasury yields offset the impact of a weaker US dollar.
Infrastructure and Capex Developments
Amid concerns about slowing government capital expenditure, the Ministry of Railways reported that it had utilized 76% of its budgetary allocation for FY25 within the first nine months of the financial year. This highlights the government’s commitment to sustaining infrastructure development despite fiscal constraints. Separately, Morgan Stanley analysts revised their projections for foreign investment inflows into Indian bonds, citing pressure on the rupee and rising US Treasury yields as key challenges.
Broader Market Implications
The interplay between global and domestic factors continues to shape market sentiment. While FIIs remain cautious due to global uncertainties, DIIs’ consistent buying reflects confidence in India’s economic resilience. The pre-Budget consultations and infrastructure focus signal the government’s intent to drive growth through targeted reforms and investments. However, currency depreciation and muted deposit growth among state-owned banks underscore challenges that need to be addressed.
Indian equity markets on January 7, 2025, showed signs of recovery after a sharp decline, supported by positive global cues and domestic institutional buying. The robust performance of sectoral indices, coupled with a rebound in broader markets, points to improving sentiment. However, macroeconomic headwinds, including currency pressures and external uncertainties, continue to warrant caution. As global markets remain volatile, the focus will be on domestic policy measures and corporate earnings to sustain the positive momentum in Indian equities.
