Sensex Gain 535 Points, Nifty at 22,957; Tomorrow Nifty Prediction

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Tomorrow Nifty Prediction

Tomorrow Nifty Prediction

Sensex and Nifty End with Gains; Market Prediction for January 29 and Beyond

The Indian stock market managed to break its two-day losing streak on January 28, buoyed by the Reserve Bank of India’s (RBI) liquidity support, which led to notable gains in large-cap stocks.

However, despite the positive performance on the day, market experts caution that volatility is likely to persist in the short term, driven by several macroeconomic and geopolitical factors.

Market Performance for January 28

On January 28, the Sensex ended the day with a robust gain of 535.24 points, or 0.71%, closing at 75,901.41. Similarly, the Nifty gained 128.1 points, or 0.56%, finishing at 22,957.25.

These gains marked a positive turn for the indices after two consecutive days of declines. However, beneath the surface, the market breadth was notably negative, with 1,116 stocks advancing, while 2,429 stocks declined.

Additionally, 84 stocks remained unchanged, signaling that the gains were not broad-based, and many segments of the market continued to face pressure.

Among the sectors, the realty, banking, and automobile indices performed relatively well, rising between 1-2%, as large-cap stocks in these sectors benefited from the RBI’s liquidity measures.

The banking sector, in particular, saw notable strength, with stocks like Axis Bank, HDFC Bank, and Shriram Finance making strong gains.

The auto sector also outperformed, supported by strong performance in stocks like Bajaj Finserv and Bajaj Finance.

In contrast, other sectors such as capital goods, power, metals, oil and gas, FMCG, healthcare, and IT showed weakness, declining by 0.5-1%.

Mid and small-cap stocks underperformed significantly, with the BSE Midcap index falling 0.6% and the Smallcap index dropping 1.7%.

This divergence between large caps and mid/small caps suggests that investor sentiment remains cautious, particularly in the broader market, as concerns about the economic slowdown continue to linger.

The top-performing stocks on the Nifty included Axis Bank, HDFC Bank, Bajaj Finserv, Shriram Finance, and Bajaj Finance.

On the other hand, some of the biggest laggards included Sun Pharma, Britannia Industries, Eicher Motors, Grasim Industries, and L&T.

These fluctuations in stock performance across different sectors are indicative of the mixed sentiment in the market.

Sector-wise Performance and Key Drivers

While the broader market remained under pressure, the realty sector emerged as the top performer on January 28, with stocks in the segment benefiting from a combination of strong earnings reports and a favorable economic outlook.

Realty stocks typically perform well when liquidity in the financial system improves, as more individuals are able to access financing for home purchases and property investments.

Banking stocks also saw a boost, as liquidity measures and the RBI’s supportive stance helped alleviate investor concerns regarding credit growth.

On the flip side, the pharma, energy, and capital goods sectors struggled. Pharma stocks, which have faced headwinds due to pricing pressures and regulatory concerns, continued to underperform, while energy and capital goods stocks saw declines due to concerns about commodity prices and global economic uncertainty.

The IT sector, which had been a significant driver of growth over the past few years, also faced headwinds, as investors grew cautious amid rising global competition and margin pressures.

Market Prediction for January 29 and Beyond

Looking ahead, the market is likely to remain volatile as investors wait for key events to unfold. According to Aditya Gaggar, Director at Progressive Shares, while large-cap stocks, particularly in the banking and auto sectors, have shown resilience, broader market segments—especially mid and small-cap stocks—have struggled to maintain their gains.

Although mid and small-caps recovered most of their losses during the trading session, they were unable to sustain their upward momentum, and the broader market weakness persisted.

Gaggar observed that the Nifty’s price action on January 28 formed a long-legged Doji candlestick pattern, which suggests a possible trend reversal.

This pattern is typically viewed as a sign of indecision in the market, with investors uncertain about the direction of the market.

However, a bullish divergence in the Relative Strength Index (RSI) is also emerging, which could signal a potential upward shift if the index closes above 23,100. The immediate resistance for the Nifty is pegged at 23,100, while the support level lies at 22,800.

Key Technical Levels to Watch:

  • Resistance for Nifty: 23,100
  • Support for Nifty: 22,800

In terms of sectoral performance, Gaggar noted that while realty stocks performed well, sectors such as pharma and energy continued to lag.

He expects further corrections in mid-cap and small-cap stocks, driven by concerns over corporate earnings and economic growth.

Given the market’s volatility, investors should tread cautiously, especially in the broader market, as price swings remain high.

Sanjeev Hota, Head of Research at Sharekhan, echoed similar concerns, indicating that the market could experience heightened volatility over the coming weeks.

He pointed to significant upcoming events, such as the Federal Open Market Committee (FOMC) meeting, India’s Budget 2025, and the RBI meeting, all of which will likely have a significant impact on market sentiment.

Additionally, the third-quarter earnings season is ongoing, and while some companies have posted strong results, others have seen slower-than-expected growth, which is contributing to uncertainty.

Hota noted that the current market environment resembles the one observed during the 2018-19 cycle, where mid-cap and small-cap stocks suffered steep declines.

In that cycle, the mid-cap index saw a sharp correction of approximately 40%, while the small-cap index experienced a similar downturn.

Historically, such cycles tend to last 12-18 months, and Hota believes that we may witness a similar trend in the next 2-3 months, with further downward pressure on mid-cap and small-cap stocks.

Impact of Foreign Institutional Investors (FIIs)

A major concern for the market in recent weeks has been the significant selling by Foreign Institutional Investors (FIIs). In January alone, FIIs have pulled out over Rs 74,000 crore from Indian equity markets.

This wave of selling is attributed to a combination of factors, including macroeconomic slowdown, declining corporate earnings, and the weakening of the Indian rupee.

Hota further explained that the selling pressure from FIIs has been mainly concentrated in Exchange-Traded Funds (ETFs), which are passive investment vehicles.

This trend of ETF withdrawals is likely to continue for some time, further contributing to market volatility.

However, there is a silver lining. Long-only funds, which focus on equity investments with a long-term horizon, have started to invest since December 2024.

These funds may provide some support to the market in the near term, especially as they focus on high-quality stocks with strong fundamentals.

Final Remarks

In summary, while the Sensex and Nifty showed positive gains on January 28, driven by liquidity measures and strength in large-cap stocks, the broader market remains under pressure.

Volatility is expected to continue in the coming weeks, especially with important events such as the FOMC meeting, India’s Budget 2025, and the RBI meeting on the horizon.

Investors should remain cautious, particularly in the mid and small-cap segments, as further corrections in these stocks are likely.

Large-cap stocks, particularly in the banking and auto sectors, may offer some relative stability, but overall, the market will likely experience choppy trading as it navigates through uncertain macroeconomic conditions.

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