Nifty, Sensex bounce over 1.8%

India’s frontline stock indices surged nearly 2% on Thursday, led by auto, IT and financial stocks in anticipation of a good show in forthcoming third quarter results.

The NSE Nifty surged 1.88% to close at 24,188.65, the best single-day gain since November 22, 2024. However, the Rupee weakened by 9 paise to close at 85.75 against the US dollar, amid strong demand from importers and foreign fund outflows. The S&P BSE Sensex gained 1,436.30 points or 1.83% to 79,943.71 points.

The market breadth remained positive for the third consecutive session, with an advance-decline ratio of 1.55. The broader market showed a mixed performance, with smaller companies lagging behind their larger counterparts. The Nifty Midcap 100 Index advanced by 1.14%, while the Smallcap 100 Index posted a more modest gain of 0.64%.

“This rally came despite losses in Asian markets, as financial, auto, and IT stocks showed remarkable strength ahead of the upcoming quarterly earnings season,” said Devarsh Vakil, deputy head of retail research, HDFC Securities.

The automotive sector spearheaded the advance, buoyed by robust December sales figures, while IT stocks gained momentum on positive Q3 earnings forecasts, he stated.

“Financial stocks made substantial contributions, bolstered by banks’ impressive quarterly deposit growth reports. Trading activity intensified significantly, with NSE cash market volumes jumping 49% compared to the previous session,” added Mr. Vakil.

Jateen Trivedi, vice president and research analyst - commodity and currency at LKP Securities, said the rupee traded weak as the dollar index climbed to 108.28, exerting continued pressure. Moreover, rising crude oil prices, that moved from $71.50 to $72.70 a barrel, further contributed to the rupee’s weakness in recent sessions.

“The combination of a strengthening dollar and rising import costs due to crude has kept the rupee under sustained pressure. The rupee’s weakness is expected to persist in the short term, with the trading range projected between 85.60 and 86.00,” he said.