The Indian stock market saw a significant bounce on January 28, with both the Sensex and Nifty 50 indices closing in positive territory after two days of losses.
The market was primarily driven by a strong performance in the banking and financial sectors, despite the mid and small-cap segments underperforming.
The market capitalisation of BSE-listed companies experienced a minor drop of ₹1 lakh crore, yet the broader sentiment remained optimistic, largely due to investor confidence in India’s long-term growth potential.
The 30-share Sensex climbed 535.24 points or 0.71 per cent to settle at 75,901.41. During the day, the benchmark surged 1,146.79 points or 1.52 per cent to hit a high of 76,512.96.
The broader 50-share NSE Nifty appreciated by 128.10 points or 0.56 per cent to close at 22,957.25. In the intraday session, the 50-share NSE Nifty climbed 308.8 points or 1.35 per cent to 23,137.95.
However, despite the positive movement in the broader indices, the mid and small-cap stocks were under pressure, with the BSE Midcap index dropping by 0.61% and the BSE Smallcap index losing 1.77%.
This underperformance in the smaller stocks led to a slight decrease in the overall market capitalisation, causing investors to lose around ₹1 lakh crore in a single day.
Several factors contributed to the upward movement of the stock market on this day. One of the key drivers was the performance of banking stocks, which carry significant weight in the Sensex and Nifty 50 indices. Heavyweights such as HDFC Bank, ICICI Bank, Axis Bank, and Bajaj Finance were the major contributors to the rally. This was further bolstered by the announcement from the Reserve Bank of India (RBI), which introduced measures to inject ₹1.5 trillion into the market. The RBI’s decision to buy government securities worth ₹60,000 crore through open market operations (OMOs) over three tranches provided an added boost to investor sentiment, particularly in the banking and financial sectors.
Another factor that played a role in the rally was the market’s rebound after two days of losses. Experts pointed out that the recent fall in the Indian stock market presented an opportunity to buy quality stocks, given the structural growth prospects of the Indian economy. The Indian stock market, despite short-term volatility, continues to demonstrate resilience with healthy corporate earnings, strong returns on equity (ROE), and low foreign institutional investor (FII) holdings.
Moreover, the significant correction in the Nifty 50, which was down by 12% from its all-time high, made large-cap stocks more attractive. The correction brought the market’s valuation in line with long-term averages, encouraging selective buying in large-cap stocks. Investors have been advised to focus on fundamentally strong stocks, as the market appears to be shifting towards large-cap outperformance.
Ahead of the upcoming Union Budget 2025, investor sentiment also saw an uptick. The Budget, set to be presented on February 1 by Finance Minister Nirmala Sitharaman, is expected to prioritise demand revival, economic expansion, and the boosting of investor confidence. Analysts anticipate measures that will support private investment and consumption, including potential incentives under Production-Linked Incentive (PLI) schemes and public-private partnerships.
From a technical perspective, the market showed some key levels of support and resistance. Experts observed that the Nifty 50 found critical support near the 22,800 mark, with potential resistance between 23,100 and 23,150. The market remained volatile, but analysts suggested that a breakout above 23,000 could provide some short-term relief, while a drop below 22,800 might lead to further declines.
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