Sensex Rises 450 Points, Nifty Surpasses 23,700 Amid Energy and PSU Bank Stock Surge

Benchmark indices Nifty and Sensex ended their two-day losing streak on January 7, buoyed by gains in energy and PSU bank stocks. All sectors traded positively following an upbeat market opening, with the broader market outperforming frontline indices by rallying over 1% each. This recovery followed a steep decline on January 6, when the indices fell 1.5% due to concerns surrounding Human Metapneumovirus (HMPV), which dampened investor sentiment.

By 9:30 am IST, the Sensex had risen 445.96 points or 0.57% to 78,410.95, while the Nifty gained 162.00 points or 0.69% to reach 23,778.05. The market breadth was positive, with 2,278 stocks advancing, 699 declining, and 113 remaining unchanged.

According to Aishvarya Dadheech, Founder and CIO of Fident Asset Management, volatility in the Indian markets is likely to persist due to both global and domestic factors. He noted that upcoming quarterly earnings reports would be key to shaping investor sentiment, but global risks, such as uncertainty surrounding the virus and developments in Japan’s yen trade, could exert additional pressure. Dadheech also pointed out that the recent sell-off may have been driven more by panic than by substantive evidence of a significant health threat. He highlighted the rising dollar index, currently near 108, as a key challenge for emerging markets like India. 

Additionally, crude oil prices increasing from $70 to around $77 per barrel could further strain the Indian rupee and equity markets. He warned that U.S. policy announcements expected on January 20 could further strengthen the dollar, posing additional risks to global equities.

The market's performance is expected to fluctuate between gains and losses until quarterly earnings results provide a clearer direction. Nifty Energy led the sectoral gains with an increase of over 1%, driven by strong performances from ONGC, Oil India, and Coal India. The Nifty PSU Bank index also rose nearly 1% on the back of gains in State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda. Meanwhile, Nifty Bank, FMCG, Pharma, and Realty sectors posted more modest gains of around 0.5%. The mid-cap and small-cap indices rebounded, rising 1.1% and 1.2%, respectively, after falling about 3% over the previous two sessions. In 2024, the Nifty Smallcap 100 and Nifty Midcap 100 indices surged by over 20% each, significantly outperforming Nifty’s 9% rise.

Stock-specific movements also drove market sentiment. ONGC shares rallied over 3% after CLSA upgraded the stock to "High Conviction Outperform" with a revised price target of ₹360 per share, indicating a potential upside of 42%. CLSA also increased its earnings-per-share estimates for ONGC by 2-8% for FY25-27. In contrast, Zomato's shares dropped 4.5% after Jefferies downgraded the stock to "hold" due to concerns over rising competition in the quick-commerce sector following a sharp run-up in its price throughout 2024. Jefferies analysts expect Zomato’s stock to consolidate in 2025 after its value more than doubled in the previous year.

Biocon shares saw a 4% gain as Jefferies upgraded its rating to "underperform" due to positive regulatory developments surrounding the approval of its Bengaluru manufacturing facility. The firm raised its price target for Biocon by 43% to ₹400, signaling a potential 12% upside from its most recent closing price.

Market technical indicators reflected mixed signals after the January 6 sell-off. Akshay Chinchalkar, Head of Research at Axis Securities, noted that the Nifty’s drop was the sharpest since October 3 and had eroded much of the recovery from the December 31 low of 23,460. He emphasized that the bulls must defend the 23,500 level to sustain a rebound, with resistance identified at 23,800. Conversely, a break below 23,500 could shift the focus to the November low near 23,260.

Top-performing stocks included ONGC, Titan Company, Tata Consumer Products, BPCL, and Shriram Finance. Meanwhile, major laggards included Apollo Hospitals, M&M, Bajaj Auto, Axis Bank, and Tata Motors. Market participants are likely to remain cautious as they await quarterly earnings reports and monitor global developments, with further market fluctuations expected in the near term.