Indian Stock Market: Indian markets maintained their winning streak for the third consecutive trading session on Thursday, January 16, tracking global peers as key US CPI numbers came in below market expectations for December, which lifted hopes that the US Fed will cut rates sooner than previously thought.
These rate cut expectations, coupled with strong earnings from major US financial institutions, including JP Morgan, Wells Fargo, Citibank, and Goldman Sachs, as well as the announcement of a ceasefire agreement between Israel and Hamas, also supported the bulls in gaining control of the markets.
The broader market, on the other hand, continued to outperform the front-line indices, while PSU banking stocks dominated the street in today's session. Additionally, better-than-expected numbers from HDFC Life Insurance Company in Q3FY25 boosted sentiment in the sector, leading to a sharp rally in major life insurance stocks.
Amid these positive developments, the Nifty 50 ended the session with a gain of 0.42% at 23,311, while the Sensex closed at 76,042, marking a 0.42% increase from the previous close.
The Nifty Smallcap 100 index rose 1.67% to 17,643, while the Nifty Midcap 100 index concluded the day with a gain of 1.08%, closing at 54,483.
U.S. CPI data, which came in line with expectations at 2.9% (MoM) for December. However, a lower-than-expected Core CPI (MoM) for December, at 0.2% against 0.3%, supporting the risky assets. Despite the softening in inflation, Fed officials had earlier expressed concerns about Donald Trump’s economic policies, which they believe could influence inflation numbers.
Donald Trump’s economic policies, aimed at making American businesses more competitive on a global scale, have raised fears of a potential global trade war. His reinforcement of tariff plans, particularly targeting China, has heightened concerns about a possible spike in inflation.
Commenting on today's market performance, Vinod Nair, Head of Research, Geojit Financial Services, said, “Benchmark indices continued to trade in the positive, albeit off highs, driven by positive investor sentiment following mild US inflation data, which raised hopes for a potential rate cut by the Federal Reserve.”
"Additionally, favourable developments in the Israel-Hamas ceasefire and a reduced trade deficit further boosted the market's upward movement. However, weak economic growth data from the UK dampened some of this optimism. Despite higher valuations compared to leading indices, the broader market saw bargain buying during the recent correction," Vinod Nair added.
Among sectoral performances, the Nifty PSU Bank emerged as the top gainer, with the index jumping 2.55% to reach 6,307. The rally in state-owned banks was driven by media reports that the government had approved a fundraising plan of ₹10,000 crore for five state-run lenders through the Qualified Institutional Placement (QIP) route.
All 10 constituents of the index ended the session in the green, with Punjab & Sind Bank leading the gainers, rallying 7%. This was followed by Indian Bank, Bank of India, Union Bank, Bank of Baroda, Canara Bank, Punjab National Bank, and Bank of Maharashtra, all gaining between 2% and 5%.
Other sectoral indices such as Nifty Metal, Nifty CPSE, Nifty Energy, Nifty Bank, and Nifty Infra all concluded today’s session with gains of over 1%.
On the downside, Nifty FMCG was the top laggard, tumbling 0.56%. Today marked the 5th consecutive day of decline for the index, resulting in a 2.75% drop so far this month.
Nifty IT, on the other hand, failed to maintain the strong rally it had seen in the previous sessions, ending the session with a decline of 0.34%. Nifty Pharma and Nifty Consumer Durables also declined by up to 0.30%.
All major sugar stocks gained notably in the session amid reports of a potential increase in ethanol prices. Dhampur Sugar Mills emerged as the top performer with a rally of 10.4%, followed by Rajshree Sugars & Chemicals, Dalmia Bharat Sugar, Dwarikesh Sugar Industries, Bajaj Hindusthan Sugar, Ugar Sugar Works, Shree Renuka Sugars, Piccadily Agro Industries, and Rana Sugars, all of which ended with gains between 5% and 10.3%.
According to media sources, the Union Cabinet is likely to approve a proposal to raise ethanol prices in its meeting today. The cost of ethanol made from B-heavy molasses is expected to rise, along with an anticipated increase in the price of ethanol derived from sugarcane juice.
“Sugar prices have skyrocketed today as the market expects a hike in ethanol prices in an upcoming Cabinet committee meeting. Amid soaring crude oil prices, the Government of India (GoI) is expected to curb its dollar expenses by increasing ethanol blending. Hence, the GoI is expected to raise B-heavy and C-heavy molasses prices in the Cabinet meeting, which may benefit sugar-making companies,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.
Amid expectations that the government may allocate more funds to Indian Railways in the upcoming Union Budget, scheduled to be presented by Union Finance Minister Nirmala Sitharaman in Parliament on February 1, 2025, stocks in the sector have surged.
Apart from the expected fund allocation, order wins have also supported the stocks, helping them end Thursday's session with healthy gains. Ircon International emerged as the top gainer with a 16% rise, settling at ₹220. Other railway PSUs, such as Rail Vikas Nigam, RailTel Corporation of India, Indian Railway Finance Corporation, and IRCTC, gained up to 10%.
Rating agency ICRA estimates adequate allocation for infrastructure sectors, such as roads, railways, and highways, as well as for defence (to increase exports and self-reliance) in FY2026. The outlay for interest-free capex loans is expected to remain unchanged at the FY2025 budgeted amount of ₹1.5 trillion, it noted.
Rupak De, Senior Technical Analyst at LKP Securities said, "The Nifty started higher and reached near 23400 before closing near 23300. The near-term sentiment might remain volatile. On the upside, 23,400, might continue to remain as crucial resistance and only a decisive move above 23,400 may lead to higher levels. While support is seen at 23150/23000."
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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