Sensex, Nifty bounce back from 7-month lows, led by IT and Banking stocks
India’s benchmark indices gained on January 28, recovering slightly from the previous session’s seven-month lows. The Nifty Bank and Nifty IT led the gains in the Nifty 50, while the healthcare and FMCG sectors saw marginal losses. The Reserve Bank of India (RBI) announced liquidity-boosting measures, which helped lift financial stocks. The RBI’s Rs 60,000 crore OMO purchase and a scheduled Variable Rate Repo (VRR) auction are seen as potential signs of an upcoming rate cut.
At 9:18 AM, the Sensex was up 342 points, reaching 75,708, and the Nifty rose by 94 points, touching 22,923. Market breadth was positive, with 1,490 shares advancing and 940 declining.
Foreign Institutional Investors (FIIs) had sold over Rs 74,000 crore worth of Indian equities in January, but Domestic Institutional Investors (DIIs) bought stocks worth Rs 73,500 crore. Ruchit Jain from Motilal Oswal Financial Services pointed out that FIIs started covering some of their short positions in index futures. He said technical support lies around 22,800, which could lead to a pullback.
Despite the gains, the BSE Midcap index remained flat, and the BSE Smallcap index fell by 0.8%. Shares of Kaynes Technology dropped by 16% after the company lowered its revenue guidance for FY25. Netweb Technologies also saw an 8% drop due to Nvidia’s poor performance, following the rise of DeepSeek, a Chinese AI startup.
Shree Finance, Axis Bank, Bajaj Finance, IndusInd Bank, and Tata Steel were the top gainers on the Nifty 50 index, while Sun Pharma, M&M, Wipro, Dr. Reddy’s, and Coal India led the losers.
The week ahead features two critical events: the U.S. Federal Reserve’s rate decision on January 29 and India’s Union Budget on February 1. Analysts expect the Fed to hold rates steady, while the market eagerly awaits India’s fiscal policy.
The global tech sector faced a blow as Chinese AI startup DeepSeek surpassed ChatGPT in the U.S. App Store, causing Nvidia’s shares to drop by 17%. This raised concerns about the Chinese AI startup’s ability to disrupt the market with lower-cost technology. As a result, Nvidia lost $593 billion in market value in one day.
Asian markets had a mixed performance. Hong Kong’s Hang Seng Index rose by 0.3%, while Japan’s Nikkei 225 fell by 0.7%, impacted by concerns over Chinese AI competition. Markets in Australia, Taiwan, South Korea, and China remained closed for the Lunar New Year.
Both Sensex and Nifty faced their worst week since June 2024, with a 3.5% drop in January. Experts attributed the decline to weaker corporate earnings, trade policy uncertainty, and continued foreign outflows.
Analysts like Anand James of Geojit Financial Services see potential for consolidation or upward movement, suggesting the indices may test higher levels around 23,128 or 23,211 in the coming days.
