Rally On D-Street: Market Gains For The 2nd Straight Day, Sensex & Nifty Rise Led By Auto Stocks

Indian stock market extended their upward trend on Thursday, with benchmark indices posting gains of over 1% each. The Sensex surged by more than 1,000 points, while the Nifty 50 surpassed the crucial 23,950 level, crossing its 200-day moving average.

The rally was fueled by robust buying in banking and IT stocks, optimism surrounding upcoming quarterly earnings, and a favorable technical outlook.

The BSE Sensex recorded an intraday high of 79,542.69, climbing 1,035.28 points or 1.31%, while the NSE Nifty 50 advanced by 328.45 points or 1.38% to close at 24,071.35. Notable gainers in the session included Bajaj Finance, Bajaj Finserv, Kotak Mahindra Bank, Infosys, HCL Technologies, Tech Mahindra, Mahindra & Mahindra, and Tata Consultancy Services.

The auto sector emerged as the day's highlight, fueled by robust sales data reported by major companies. The Nifty Auto, FMCG, and Infra indices posted gains of around 0.5%, driven by investor optimism. On the flip side, indices like Consumer Durables, PSU Banks, and Metals experienced declines, reflecting mixed sectoral trends.

Auto stocks led the charge, with Tata Motors, M&M, and Maruti Suzuki contributing significantly. Tata Motors rose over 1% after announcing a modest 1% year-on-year growth in December domestic sales. The company sold 76,599 units during the month, compared to 76,138 units a year ago. Passenger vehicle sales, including electric vehicles, climbed 1% to 44,289 units, while commercial vehicle sales saw a slight dip of 1% to 33,875 units.

M&M also gained, buoyed by Citi's 'buy' rating on the stock. Citi highlighted M&M's 22% year-on-year tractor sales growth and strong utility vehicle volumes, supported by new model launches. The brokerage anticipates continued momentum in tractor sales, particularly with a favourable harvest season on the horizon.

In contrast, Wipro shares slipped after CLSA downgraded the stock to a 'hold' rating, citing concerns over flat quarter-on-quarter growth in constant currency terms for Q3.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, provided a cautious outlook on market performance. He noted that December's GST collections declined by 2.97% month-on-month, signalling a potential slowdown in economic growth. "Leading indicators so far do not point to a pickup in economic growth. Therefore, Q3 corporate earnings may not show a significant rebound. Investors should focus on segments that can buck the slowdown, such as IT, pharma, and some financials, along with luxury consumption sectors like hotels, jewellery, and aviation," Vijayakumar said.

Foreign institutional investors (FIIs) extended their selling spree, offloading equities worth Rs 1,782 crore on January 1. In contrast, domestic institutional investors (DIIs) provided some support by buying Rs 1,690 crore worth of equities. Vijayakumar emphasized that while DII buying could stabilize markets at lower levels, a sustained upward movement would require growth and earnings recovery signals.

Among individual stocks, Kotak Mahindra Bank, Bajaj Finance, Tata Motors, Dr Reddy's Laboratories, Shriram Finance, and Maruti Suzuki emerged as the top gainers on the Nifty. Meanwhile, NTPC, HDFC Bank, Hero MotoCorp, and TCS were among the major laggards.

The market also witnessed notable activity in stocks influenced by corporate updates. Power Mech gained 5% after securing a Rs 294 crore order from Adani Power, while Dynacons advanced 3% after bagging a Rs 280 crore data centre project with Canara Bank.

Despite the positive start to the year, challenges remain for Indian equities. The continued strength of the US dollar and attractive bond yields in the US are likely to keep FIIs wary of emerging markets in the near term. Vijayakumar highlighted that higher market levels would depend on visible signs of economic recovery and stronger corporate earnings in the coming quarters.

In the immediate term, market movements are expected to be sector-specific, with auto, IT, and pharma stocks leading the way. Investors will closely monitor corporate earnings updates and economic indicators for further cues.