Market rallies amid earnings uncertainty and budget anticipation 

The Indian stock markets staged a modest recovery on Thursday, with the benchmark indices closing marginally higher as investors remained cautious ahead of the upcoming Union Budget and ongoing corporate earnings season.

The Sensex closed up 115.39 points or 0.15 per cent at 76,520.38, while the Nifty 50 gained 50 points or 0.22 per cent to end at 23,205.35. The day’s trading session was characterised by subdued sentiment and selective buying, particularly in the IT and cement sectors.

UltraTech Cement emerged as the top gainer, surging 6.67 per cent after reporting financial results that, despite a year-on-year profit decline, beat market expectations. The stock was supported by strong volume growth and cost efficiencies. Other top performers included Grasim Industries (+2.96 per cent), Wipro (+2.78 per cent), Shriram Finance (+2.38 per cent), and Sun Pharma (+2.23 per cent).

Conversely, state-owned oil marketing company BPCL led the losers, dropping 2.14 per cent, followed by Kotak Bank (-1.28 per cent), HCL Tech (-1.14 per cent), State Bank of India (-0.96 per cent), and Reliance (-0.96 per cent).

“Markets were range-bound with a mixed bias intra-day and ended slightly higher as investors resorted to select buying in beaten-down IT, telecom, and realty shares,” said Prashanth Tapse from Mehta Equities Ltd. He highlighted concerns about foreign fund outflows triggered by the rupee’s sharp fall against the dollar.

The IT sector was a key bright spot, with the Nifty IT index climbing over 2 per cent, driven by robust third-quarter earnings and relief from protectionist tariffs. “The recovery in IT majors has been the primary driver of the index’s rebound,” noted Ajit Mishra from Religare Broking Ltd.

The rupee continued to face pressure, trading lower by 0.09 paise at 86.43 against the US dollar. “The upcoming Union Budget will play a crucial role in shaping market sentiment and the rupee’s trajectory,” said Jateen Trivedi from LKP Securities. He emphasised that a growth-oriented budget focusing on ease-of-doing business could provide much-needed support to the currency.

The broader market indices were resilient, with the Nifty Midcap 100 index increasing by 1.86 per cent and the Nifty Smallcap 100 index rising by 1.12 per cent. The advances-declines ratio stood at 1.17 on the BSE, indicating more advances than declines.

Technical analysts remain cautiously optimistic. Shrikant Chouhan from Kotak Securities suggested that as long as the Nifty trades above 23,100, a pullback formation is likely to continue, with potential upside to the 23,400-23,450 range.

Market participants are now focusing on the upcoming US Federal Reserve policy meeting on January 29, 2025, with expectations building for a potential rate-lowering stance based on recent economic data.

“Uncertainty lingers about trade tariff measures and their potential impact on global trade, inflation, and currency volatility,” said Vinod Nair from Geojit Financial Services. The market trend shows a declining momentum year-to-date, with traders contemplating the upcoming 2025 Budget.

As the earnings season progresses, mixed signals have emerged. While IT companies project an optimistic outlook on recovery in IT spending, FMCG commentary suggests continued challenges in domestic consumption, particularly in urban markets.

Investors are advised to remain cautious, maintain balanced positions, and closely watch the Budget presentation and upcoming corporate results for further market direction.