KKN Gurugram Desk | Indian stock markets witnessed a positive rebound on January 29, 2025, with both the Sensex and Nifty 50 gaining momentum in the morning session. Led by IT, financial services, and auto stocks, the benchmarks recovered over 0.5% by noon. However, Nifty FMCG bucked the trend, slipping nearly 1%, while broader indices like Nifty Midcap and Nifty Smallcap continued to struggle.

Despite today’s market uptick, Sensex and Nifty remain 12% lower than their record highs of September 2024, indicating ongoing market volatility and corrections in overvalued sectors. Experts suggest that the market correction phase is necessary for sustainable growth, with valuations reverting to mean levels.

Sensex and Nifty Performance: Key Highlights

• Sensex rose by 302 points (0.4%) to trade at 76,203 (as of 11:27 AM).
• Nifty 50 gained 106 points (0.5%) to reach 23,064.
• Market breadth favored bulls, with 2,690 stocks advancing versus 659 declining, while 123 remained unchanged.
• Nifty FMCG fell nearly 1%, going against the broader market trend.
• Nifty Midcap index is down 9.1% YTD, while Nifty Smallcap index has dropped 14.71% YTD.

Market Expert Insights: Correction is Healthy

According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the market is currently undergoing a valuation correction, which he believes is a healthy trend.

“Valuations are reverting to mean. This trend will make the market healthier and is likely to continue. Correction in the overvalued broader market is desirable,” he said.

This suggests that while investors may experience short-term volatility, long-term market stability is being reinforced.

Sector-Wise Performance: IT, Financials, and Auto Drive Gains

While most sectoral indices traded in the green, Nifty FMCG was the only laggard, declining nearly 1%.

Sectors That Led the Market Rally:

• IT Stocks Surge (Nifty IT up 1.5%)
  • The IT sector gained momentum, taking cues from global tech stock recovery.
  • U.S. tech stocks, including Nvidia and Apple, saw sharp rebounds, boosting investor sentiment.
  • The Nasdaq climbed 2%, while Nvidia stock rebounded 9% after suffering a 17% decline in the previous session, which erased $593 billion in market value.
• Banking Sector Strengthens (Nifty Bank Gains 0.4%)
  • Nifty Bank extended its 1.7% rally from the previous session, adding another 0.4% today.
  • RBI’s liquidity injection measures, including bond purchases and dollar/rupee swaps, have improved market sentiment.
  • The Reserve Bank of India (RBI) announced a $17.39 billion liquidity injection, which analysts view as a precursor to a potential rate cut next month.
• Auto and Financial Services Stocks Lead Nifty 50 Gains
  • Auto stocks gained momentum, supported by positive earnings outlooks and strong demand recovery.
  • Financial services stocks performed well as investors factored in potential rate cuts by the RBI.

Broader Market Trends: Midcaps and Smallcaps Under Pressure

Although the Sensex and Nifty 50 showed gains, broader markets continued to underperform:

• Nifty Midcap index is down 9.1% YTD
• Nifty Smallcap index has declined 14.71% YTD

Market volatility has particularly impacted small and mid-cap stocks, making them the primary victims of the ongoing correction.

“At present, the heightened volatility remains a significant concern, with small and mid-cap stocks being most affected. Traders need to remain vigilant and adjust their strategies accordingly,” said Sameet Chavan, Head of Research, Technical and Derivative at Angel One.

Technical Analysis: Key Levels to Watch

• Immediate Support Level for Nifty 50: 22,800
• Intermediate Resistance Zone: 23,100-23,150
• Strong Resistance Zone: 23,350-23,400

According to technical analysts, if Nifty breaks above the 23,350-23,400 resistance level, it could trigger a strong bullish sentiment in the market.

Global Market Impact on Indian Stocks

U.S. Market Rally Lifts Sentiment

• The Nasdaq surged 2%, driven by a rebound in AI-linked tech stocks.
• Nvidia stock jumped 9% after suffering its biggest one-day loss last week.
• Apple shares gained nearly 4% as investors anticipated strong quarterly earnings from Apple, Microsoft, and other tech giants.

Federal Reserve Policy in Focus

• Investors await cues from the U.S. Federal Reserve, as its monetary policy decision could impact global liquidity trends.
• Analysts believe that if the Fed signals a pause or rate cut in 2025, emerging markets like India could benefit.

While the Sensex and Nifty have shown resilience today, the market remains in a correction phase, with broader indices like Nifty Midcap and Smallcap under pressure.

The RBI’s liquidity injection, strong IT stock performance, and global market cues have fueled optimism, but traders must remain cautious amid heightened volatility.

For investors, key levels to watch include Nifty 22,800 as support and 23,350-23,400 as the next breakout zone. If global markets continue to recover, the Indian stock market could witness a stronger uptrend in the coming weeks.