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Market Surge: Sensex Soars 1,400 Points Amid Strong Auto Sales and Financial Recovery Ahead of Earnings Season

February 8, 2025
Smart Money

Indian Stock Market Soars with Sensex Rally of 1,400 Points on Thursday

In an impressive display of market momentum, the benchmark BSE Sensex witnessed a significant rally, soaring by 1,436 points or 1.83% to close at 79,943 on Thursday. The broader NSE Nifty50 also recorded strong gains, ending the day at 24,188, up 446 points or 1.88%. This robust performance comes just ahead of the eagerly awaited quarterly earnings season set to commence next week.

Market Overview: Gains Across the Board

During Thursday’s trading session, the Sensex at one point surged over 1,500 points, while the Nifty50 reclaimed the significant 24,200 milestone. The market capitalisation of all companies listed on the BSE saw an increase of Rs 5.89 lakh crore, reaching a total of Rs 450.32 lakh crore. The positive sentiment enveloped the market with all major sectoral indices closing in the green. Notably, sectors such as Auto, Financial Services, IT, and Consumer Durables led the charge, recording gains between 1.5% and 3.8%.

Key Drivers Behind Thursday’s Surge

Several key factors contributed to the notable rally in the stock market:

1. Strong December Auto Sales

The automotive sector emerged as a significant catalyst for market momentum, with shares of auto manufacturers performing exceptionally well. Eicher Motors led the way with an impressive rise of 8.5% following the announcement of a 25% year-on-year increase in Royal Enfield sales. The company sold 79,466 units in December compared to 63,887 units during the same month last year. Additionally, Maruti Suzuki’s shares surged by 5.6% after the company reported a staggering 30% year-on-year growth in sales, delivering 178,248 units compared to 137,551 units the previous year. Other auto giants, including Mahindra & Mahindra and Ashok Leyland, also reported better-than-expected sales, contributing to the sector’s rally.

2. Rise in IT Stocks

The IT sector showed resilience, climbing 2.3% amid positive forecasts for the industry’s revenue growth by research firms like CLSA and Citi. Major players in the IT space, including Infosys, Tata Consultancy Services (TCS), HCL Technologies, and Tech Mahindra, collectively contributed over 360 points to the Sensex, showcasing investor confidence in the sector’s prospects.

3. Optimism for the Indian Economy

A report from Bernstein suggested that the Indian economy may be emerging from a phase of stagnation. According to their analysis, the economy has likely bottomed out, with growth anticipated to recover within the next one to two quarters. Bernstein’s confidence in the economic outlook led them to revise target valuation multiples and project a year-end Nifty 50 target of 26,500, signaling a potential return of 12% for the year.

4. Recovery in Banking and Financial Stocks

A strong rebound in banking and financial stocks bolstered the market rally, led by Bajaj Finserv and Bajaj Finance, which surged nearly 8% and 6.5%, respectively. Other private banks, including HDFC Bank, Kotak Mahindra Bank, and IndusInd Bank, also contributed to the positive sentiment in the financial sector.

5. Expiry Day Buying

Thursday marked a key expiration day for weekly options, which saw buying activity surge as the Nifty traded within a defined range of 23,900 to 23,500 over the past two weeks. The decisive breakout above this resistance level was a crucial factor in driving the day’s notable gains.

Conclusion

As the market moves into the earnings season next week, investors are closely watching how these sectors perform. With significant gains in financial, auto, and IT stocks and positive sentiments surrounding the economy, the outlook for the Indian stock market remains optimistic. Investors are keen to see if this upward trajectory will sustain as more data emerges from quarterly earnings reports.