The Indian stock market started the new year on a high note, with the BSE Sensex surging over 1,400 points and the Nifty50 crossing the 24,150 mark. Strong auto sales drove the rally in December, gains in the IT sector, a positive economic outlook, robust performance in the financial sector, and specific expiry trading patterns favoring the bulls. The index showed a positive reversal pattern from a technical analysis perspective, indicating a potential upward trend shortly.
Automakers were the top performers, lifting India’s blue-chip stocks to new highs despite mixed results in global stock markets. Bharath Rajeswaran, a financial analyst based in Bengaluru, reported that leading automotive companies demonstrated solid performance figures, driving market optimism. “The automotive sector is proving to be a cornerstone for market growth, showcasing robust demand and innovative advancements,” Rajeswaran said.
While India’s stock market celebrated gains, global markets performed differently. In the U.S., stocks fell as early gains fizzled out, continuing a downward trend from the end of the previous year. The U.S. dollar hit a two-year high as new economic data pointed to a strong labor market, a factor investors are closely watching.
The NSE Nifty 50 Index rose 1.9%, the biggest gain since November 22nd, to close at 24,188.65 on Thursday. The S&P BSE Sensex Index closed 1.8% higher. This surge contrasts with a 0.3% drop in the MSCI Asia Pacific index, weighed down by weak economic data from China.
Software exporters and carmakers were the major contributors to the rally.
Auto sales drive Sensex surge
“This is purely a short covering move on Nifty’s weekly expiry,” said Manish Chowdhury, head of research at brokerage StoxBox, adding that foreign investors were heavily short.
“I’ll wait two or three more days for a clear trend,” he added. Overseas investors’ bearish bets on Nifty futures Wednesday were the highest since June last year, according to data compiled by Bloomberg. The Nifty index advanced for the ninth straight year in 2024 with a modest 9% return, as sustained domestic buying cushioned heavy foreign fund outflows in the December quarter.
However, concerns over a slowing economy and higher valuations may continue to weigh on the outlook for 2025. Technology firm Infosys Ltd. gained as much as 4.3%, contributing the most to Nifty’s advance, while HCL Technologies Ltd. hit a fresh record high. Automakers Maruti Suzuki India Ltd. and Mahindra & Mahindra Ltd. also rallied after strong December sales helped ease concerns over the substantial backlog of unsold stock. Investors remain optimistic about the automotive sector’s future, which could signify sustained growth in the coming months. However, the market trend will become more apparent in the next few days.
