Sensex 400 pts higher at 76,700; BSE Mid, Smallcap gain 1%, Metal, PSB climb 3%

Indian benchmark equity indices BSE Sensex and Nifty50 were trading higher on Tuesday, amid mixed global cues.

At 10 AM, the BSE Sensex was higher by 335.04 points, or 0.44 per cent, at 76,665, and the Nifty50 was at 23,184, up 98.85 points, or 0.43 per cent.

After the opening bell, 22 out of the 30 stocks on the BSE Sensex were trading higher, with gains led by Zomato (up 3.50 per cent), followed by Tata Motors, IndusInd Bank, NTPC, and Adani Ports & SEZ. Losses, meanwhile, were capped by HCLTech (down 9.35 per cent), followed by Tech Mahindra, Infosys, TCS, and Hindustan Unilever.

On the Nifty50, 35 stocks were trading higher, with gains led by Adani Enterprises (up 3.51 per cent), followed by Tata Motors, IndusInd Bank, NTPC, and Adani Ports, while losses were capped by HCLTech (down 9.34 per cent), followed by Tech Mahindra, Wipro, Infosys, and TCS.

Across sectors, the IT index was the biggest drag, falling 2.11 per cent, followed by the FMCG index, which was down 0.50 per cent. On the flip side, the Metal index was the top gainer, climbing 2.75 per cent, followed by the PSU Bank index, which was higher by 2.26 per cent.

That apart, the Auto, Bank, Financial Services, Media, Private Bank, and Oil indices were higher by more than 1 per cent each.

The broader markets had also found some strength, with the Nifty Midcap 100 climbing 1.48 per cent and the Nifty Smallcap 100 gaining 0.98 per cent.

A strong US economy and sticky inflation concerns, widely expected to delay the US Federal Reserve’s rate easing cycle, coupled with a rising dollar and Treasury yields weighed on market sentiment there, dragging down benchmark indices on Wall Street, even as they recovered some ground to close on a mixed note.

Closer home, however, lower-than-expected retail inflation print for December and a strong buying trend from domestic institutional investors (DIIs) in the face of continued selling by foreign institutional investors (FIIs) is likely to prop up sentiment in the domestic markets, as expectations from the upcoming budget announcement and the Indian central bank’s rate-setting meeting come into view for investors here.

FIIs net sold Indian equities worth Rs 4,892.84 crore on Monday, while DIIs net bought shares worth Rs 8,066.07 crore during the trading session.

Meanwhile, retail inflation, based on the consumer price index (CPI), fell slightly to a four-month low of 5.22 per cent in December from 5.48 per cent in November, driven by easing food inflation. However, experts say with the sharp depreciation of rupee and retail inflation remaining above 5 per cent, the hopes of a much-anticipated policy rate cut by the Monetary Policy Committee (MPC) in the February review have receded. READ MORE

In other news, the club of billionaire promoters in India expanded to a record high of 201 members at the end of 2024, up sharply from 157 at the close of the equivalent period the previous year and 126 when 2022 ended. Their combined wealth went past $1 trillion for the first time and reached an all-time high of $1,023.9 billion at the end of December.

Separately, the depreciation in the rupee is unlikely to bring the markets down, though it makes returns of foreign investors from Indian equities less attractive. The rupee declined by 3.1 per cent since September, and Indian equity benchmarks Nifty and Sensex fell by 8.5 and 7.3 per cent, respectively, during the same period. However, the markets need not tank every time the rupee depreciates sustainably over months. READ MORE

Elsewhere, net direct tax collection surged 15.9 per cent to Rs 16.9 trillion between April 1 and January 12 of 2024-25 (FY25), according to the latest data released by the income tax (I-T) department on Monday. Of this, non-corporate tax — which includes taxes paid by individuals, Hindu Undivided Families, firms, bodies of individuals, associations of persons, local authorities, and artificial juridical persons — grew 21.6 per cent year-on-year (Y-o-Y) to Rs 8.7 trillion.

That apart, the risk-reward balance for the Indian market is poor despite the recent correction, said Kotak Institutional Equities in a note. The note said the recent broad-based correction in the Indian market does not change its cautious outlook, given full-to-frothy valuations in most parts of the market and low scope for earnings upgrades given fairly aggressive earnings, profitability and volume assumptions across sectors. READ MORE

However, benefitting from improving earnings before interest, taxes, depreciation, and amortization (Ebitda), Indian-rated corporates are likely to see their net leverage ratio decline to 2.7x in the next financial year 2025-26 (FY26) from 3.1x in the year ending March 2025 (FY25). The net leverage may fall further below 2.5x level in FY27, according to rating agency Fitch Ratings. READ MORE

Moreover, according to ICICI Prudential Mutual Fund’s 2025 outlook, year 2025 will be ‘A tale of two halves’ wherein the global economy is on a downhill and Indian economy is continuing its upward trend. However, the equity market faces near-term challenges like high valuations and moderate earnings. READ MORE

In the primary markets, meanwhile, shares of Quadrant Future IPO and Capital Infra IPO in the mainline section and Delta Autocorp IPO, Avax Apparels IPO and BR Goyal IPO in the SME section will list on the exchanges. That apart, Laxmi Dental IPO from the mainline section will enter the Day 2 of its subscription window, while Sat Kartar IPO in the SME section will enter the last day of its subscription windo and Barflex Polyfilms IPO will enter the Day 3 of its subscription window.

In the previous trading session, the benchmark equity indices BSE Sensex and Nifty50 ended the week’s first trading session lower, settling down by over 1 per cent each. The SE Sensex tumbled as much as 1,031.65 points or 1.35 per cent to settle at 76,347.26 and the NSE Nifty50 ended lower by 345.55 points or 1.47 per cent, at 23,085.95.

Broader markets also mirrored the benchmarks as the Nifty Smallcap100, and Nifty Midcap100 indices declined by over 4 per cent each.

All sectoral indices on the NSE platform ended in the red. The Nifty Realty index ended down by 6.47 per cent, and Nifty Media by 4.54 per cent, while Nifty PSU Bank, Metal, Consumer Durables, and Healthcare indices ended down by over 3 per cent each.

Elsewhere, markets in the Asia-Pacific region traded mixed on Tuesday following a mixed session on Wall Street.

Australia’s S&P/ASX 200 rose 0.26 per cent.

Japan’s Nikkei 225 dipped 1.54 per cent and the Topix was down 1.10 per cent. South Korea’s Kospi was trading marginally lower by 0.08 per cent, while the Kosdaq added 0.25 per cent.

Hong Kong’s Hang Seng index was up 0.57 per cent, and mainland China’s CSI 300 rose 0.5 per cent. The Shanghai Composite was ahead by 0.59 per cent.

Japan’s 40-year government bond yield rose to 2.755, its highest on record at since 2007, data from LSEG showed.

Global stock indices mostly dipped on Monday, while US Treasury 10-year yields touched 14-month highs as a resilient US economy and persistent inflation prompted investors to weigh the possibility that the Federal Reserve may pause its easing cycle.

The US dollar index hit its highest level in more than two years. The Nasdaq fell, while the benchmark S&P 500 bounced off a two-month low to finish with a slight gain.

Investors anxiously await Wednesday’s US Consumer Price Index reading. Any upside surprises could feed fears that the Fed may pause its rate cuts. A Reuters poll of economists gives a median forecast for an annual rise of 2.9 per cent, up from November’s 2.7 per cent, and for a monthly increase of 0.3 per cent.

US producer prices data is due on Tuesday.

On Friday, the December employment report showed 256,000 workers were added to US nonfarm payrolls, the biggest increase since March and well above expectations for a rise of 160,000.

Investors also worry whether inflation could pick up as a result of policies on tariffs, migration and taxes of US President-elect Donald Trump’s incoming administration.

Markets are pricing in about 27 basis points of cuts from the Fed this year, with a 52.9 per cent chance for a June cut.

The next Fed policy meeting is scheduled for Jan. 28-29.

The benchmark 10-year note yield touched a 14-month high of 4.805 per cent and was last up 1.6 basis points at 4.79 per cent.

On Wall Street, the Dow Jones Industrial Average rose 358.67 points, or 0.86 per cent, to 42,297.12, the S&P 500 rose 9.18 points, or 0.16 per cent, to 5,836.22 and the Nasdaq Composite fell 73.53 points, or 0.38 per cent, to 19,088.10.

MSCI’s gauge of stocks across the globe also fell 2.07 points, or 0.25 per cent, to 831.79. The STOXX 600 index dropped 0.55 per cent.

The fourth-quarter US earnings reporting season also gets under way this week with results expected from some of the biggest US banks including JPMorgan Chase.

“The question investors are grappling with is what’s more important – strong corporate earnings, which come from a strong economy, or lower inflation, which comes from a weaker economy,” said Oliver Pursche, senior vice president, advisor for Wealthspire Advisors in Westport, Connecticut. “Most investors would prefer a strong economy with slightly elevated inflation,” he said.

The dollar index, which measures the greenback against a basket of currencies, rose 0.26 per cent to 109.94. Earlier in the session it rose to its highest in more than two years, peaking at 110.17 and adding to its recent rally.

A jump in energy prices added to investor unease over inflation. Oil prices climbed about 2 per cent to a four-month high as traders expected wider US sanctions on Russian oil would force buyers in India and China to seek other suppliers.

US crude rose $2.25 to settle at $78.82 a barrel and Brent rose to $1.25 to settle at $81.01.

With the dollar gaining, gold fell 0.9 per cent to $2,664.49 per ounce. Gold generally struggles to compete for investor cash in a high-yield, high-dollar environment.