Nifty & Sensex Climb on Pharma, Realty, and Auto Sector Gains

On December 2, the Nifty and Sensex climbed for the second consecutive session, driven by notable advances in the pharma, realty, and auto sectors. Broader market indices also demonstrated strength, reaching their highest levels in a month and bolstering market sentiment despite persistent volatility and valuation concerns.

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Investors appeared unperturbed by weaker-than-anticipated GDP figures, which slowed to the lowest pace in nearly two years for the July-September quarter. This resulted in India’s 10- and 5-year bond yields falling to their lowest point in 30 months.

Looking ahead, markets are expected to respond to the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting set for December 4. According to a survey conducted by Moneycontrol involving 15 economists, bankers, and fund managers, the RBI is expected to keep the policy rate unchanged for the 11th consecutive time, citing elevated inflationary pressures.

As of 2:30 PM, the Nifty had risen by 0.6 percent to 24,273, while the Sensex advanced 0.58 percent to 80,265. On the Bombay Stock Exchange, 2,443 stocks posted gains, 1,573 recorded losses, and 185 remained unchanged.

“The broad-based market rally, coupled with strong performance following disappointing GDP data, underpinned today’s gains,” commented Aishvarya Dadheech, Founder and CIO at Fident Asset Management, in an interview with Moneycontrol. He added, “The primary concern remains foreign institutional investor (FII) outflows, which could persist until the end of December, potentially reaching Rs 25,000 crore by year-end.”

The mid- and small-cap indices outperformed the benchmark indices, gaining 0.7 and 0.1 percent, respectively. Analysts indicate that these segments have undergone meaningful corrections over the past two months, potentially setting the stage for renewed buying interest. Currently, mid- and small-cap indices are trading 5 and 8 percent below their recent peaks.

Sectoral and Stock Highlights

Cement stocks shone in today’s trade, with UltraTech Cement leading the pack, gaining 3 percent. Jefferies expressed optimism about a recovery in the Indian cement sector during the second half of the fiscal year, identifying UltraTech Cement as its top large-cap pick and JK Cement as its preferred mid-cap choice. The brokerage attributed its outlook to stabilizing prices and improving demand dynamics.

EMS major Dixon Technologies reached a new 52-week high after its subsidiary, Padget Electronics, announced plans to commence mass production of Google Pixel smartphones in collaboration with Compal Smart Device India for Google Information Services India.

Meanwhile, IndusInd Bank declined over 1 percent following Morgan Stanley’s "equal-weight" rating. The brokerage highlighted weakening trends in the bank’s microfinance segment as a key concern, suggesting further downside risks and potential reductions to earnings per share (EPS) estimates.

Among sectoral indices, Nifty Auto, IT, Metal, Pharma, and Realty rose by 1 to 2.5 percent, with the Realty index leading due to gains in stocks like Microtech Developers, Godrej Properties, DLF, and Prestige. Auto stocks rallied on the back of robust November sales data from companies such as Maruti Suzuki, M&M, TVS, Bajaj Auto, and Tata Motors.

Nifty PSU Bank was the sole laggard, dipping 0.4 percent as Union Bank, Bank of India, and SBI dragged the index lower.

Market Outlook

Anand James, Chief Market Strategist at Geojit Financial Services, noted, “Last week, we anticipated a brief dip after the prior Friday’s rally. Following a period of consolidation, the market showed signs of recovery from 23,900 post-expiry. This indicates a potential shift in the selling trend observed since September 27.”

He added, “If buying momentum sustains, the Nifty could target 24,700, representing its 50-day simple moving average. However, failure to hold above 24,230 early this week may lead to a pullback towards 23,700.”

Key gainers on the Nifty included UltraTech Cement, Grasim, Apollo Hospitals, Shriram Finance, and JSW Steel. Conversely, HDFC Life, Cipla, SBI Life, NTPC, and IndusInd Bank emerged as the top losers.