Indian equity markets began the new year on a powerful note, posting substantial gains on Friday, January 2, 2025. Widespread buying activity across multiple sectors and growing optimism ahead of the third-quarter earnings season fueled the rally, propelling key indices to fresh milestones.
Benchmarks Scale New Heights
The Sensex advanced by 573 points, or 0.67%, concluding the session at 85,762.01. The Nifty 50 index soared to a new all-time intraday peak of 26,340 before settling at a historic closing level of 26,328.55. This marked a gain of 182 points, or 0.70%, for the benchmark. The bullish sentiment extended to broader markets as well, with the BSE Midcap index rising 0.97% and the Smallcap index climbing 0.79%.
Market Outlook and Sectoral Performance
According to Dharmesh Shah of ICICI Securities, the equity benchmark started 2025 on solid footing, with Nifty regaining momentum to touch life highs. For the week, Nifty gained over 1%. Sectorally, Auto, Metal, and PSU Bank stocks remained in the limelight, while FMCG and IT sectors underperformed.
Shah noted that the weekly price action formed a bullish candle, indicating strong buying interest. The breakout from a five-week consolidation range (26,300-25,700) confirms the resumption of the uptrend. ICICI Securities maintains a positive stance, expecting Nifty to extend the rally towards 26,800 in January 2025. Strong support is placed at the 25,700 level.
In a significant move, the Bank Nifty index recouped four weeks of decline in just one week, also clocking a fresh All-Time High. Analysts highlight that the rally is broadening, with 50% of stocks now trading above their 50-day Simple Moving Average (SMA), compared to just 27% two weeks ago.
Key Factors and Stocks to Watch
Several monitorables are lined up for the coming week that could influence market direction:
- The onset of the Q3-FY26 earnings season.
- Developments regarding the US-India Trade Deal.
- Quarterly business updates from companies.
- Movement in Brent Crude Oil prices, which are trading softly near the lower band of consolidation.
Dharmesh Shah has recommended two stocks for the week:
Larsen & Toubro: Buy in the range of ₹4,000-₹4,165 with a target price of ₹4,520 and a stop loss at ₹3,798.
Union Bank: Buy in the range of ₹152-₹157 with a target price of ₹175 and a stop loss at ₹144.
The analysis also points out that the ratio chart of MSCI India versus MSCI World has bounced from cyclical lows, indicating a potential for relative outperformance of Indian equities against global markets in the period ahead. Banking continues to lead the charge, supported by Auto and Metal sectors, while renewed traction in beaten-down areas like Power, PSU, and Realty bodes well for a sustained broad-based rally.
