Benchmark stock market indices continued their positive momentum for the second consecutive day, supported by gains in automobile stocks, which helped to prop up overall market sentiment. Investors remained cautiously optimistic, with the broader market showing resilience in the face of various global and domestic economic concerns.
The S&P BSE Sensex closed 226.59 points higher, finishing at 78,690.07, marking another day of steady gains. Similarly, the NSE Nifty50 ended the session up by 63.20 points, settling at 23,813.40. This marked a positive outlook for both indices, despite the overall market lacking significant catalysts to drive major movements.
Most of the broader market indices also ended the day with gains, with a marked decrease in volatility compared to recent sessions. The Nifty Auto index emerged as a top performer among the sectoral indices, benefiting from expectations of increased automobile sales and growing optimism for a pickup in volumes in December. The Nifty Pharma index also posted positive returns, as investors took a more cautious but positive stance on the pharmaceutical sector amid ongoing domestic and global health concerns.
The top five gainers on the Nifty50 were Dr Reddy's, IndusInd Bank, M&M, Tata Motors, and Eicher Motors, with all these stocks benefiting from specific sectoral or company-specific positive news. Dr Reddy's, for instance, saw gains amid positive investor sentiment toward pharmaceutical stocks, while automobile stocks like M&M, Tata Motors, and Eicher Motors gained on expectations of rising sales and strong demand in the upcoming months. On the other hand, the biggest losers of the session were Hindalco, SBI, Coal India, ONGC, and BEL, which saw pressure due to sector-specific or broader market concerns.
Vinod Nair, the Head of Research at Geojit Financial Services, remarked that trading during the Christmas week ended on a subdued note, largely due to the absence of significant triggers for market movement. He highlighted that investor sentiment was also impacted by caution ahead of the swearing-in of the US Republican Party administration in January 2025, with uncertainty around potential policy changes. Additionally, Nair pointed out the weakening of the Indian rupee, which dropped to a new low during the day, as a major concern. The rupee's decline was attributed to multiple factors, including expectations of fewer rate cuts from the US Federal Reserve, a widening trade deficit, and the slow pace of domestic economic growth. This combination of factors weighed on investor sentiment.
Despite these challenges, the auto sector stood out as one of the day's key performers. The Nifty Auto index outperformed other sectors, fueled by a general expectation of a pickup in volumes for automobile companies in December and an overall positive outlook on valuations within the sector. This sector has remained resilient, as it continues to benefit from a post-pandemic recovery in demand and solid domestic sales. Investors appeared confident that the auto industry would continue to be a strong contributor to the broader market's growth, despite broader economic challenges.
Looking ahead, analysts and investors will closely monitor developments in global markets, particularly the economic policies of the incoming US administration, as well as any potential policy shifts from the Reserve Bank of India that may impact market dynamics in the coming weeks. Additionally, the continuing volatility in the foreign exchange market, particularly regarding the rupee, will be closely watched as it could have broader implications for inflation and economic growth.
