Indian equity markets continued their upward momentum on January 30, 2025, with both the Sensex and Nifty extending their early gains. Investors are anticipating the Union Budget 2025, which is expected to deliver measures aimed at stimulating growth while maintaining fiscal discipline. However, the broader market indices, including the BSE Midcap and Smallcap indices, outperformed their benchmark counterparts, rising nearly 1% as sector-specific movements played a major role.
Sensex and Nifty: Riding a Positive Wave
Indian indices started the trading day flat, following the U.S. Federal Reserve’s decision to keep interest rates steady. The Fed’s stance on monetary policy did little to shake the markets as global cues remained muted. However, the Indian stock market has found its footing, with the Sensex and Nifty registering modest but steady gains in early trade.
Investors are closely watching the Federal Reserve’s next moves, but today’s session is expected to remain largely subdued with an upside bias. Despite the flat open, there seems to be a growing sense of optimism in the market. “Movements can go either way, but downside risk appears capped for now,” said Nirav Karkera, Head of Research at Fisdom.
Market volatility has been elevated, with India VIX, the gauge of market fear, rising for five consecutive sessions. The VIX hit over 19, its highest level in nearly a month, as traders brace for the expiry of January futures and options contracts. This event typically marks a period of heightened volatility, with traders adjusting their positions.
Broader Markets Shine
While the Sensex and Nifty indices have seen moderate gains, the BSE Midcap and Smallcap indices have shone brighter. Both segments gained nearly 1%, outperforming their large-cap counterparts. The mid and small-cap stocks have been benefiting from investor interest, especially with the upcoming budget on the horizon.
Investors are hopeful that Finance Minister Nirmala Sitharaman will announce measures to fuel growth and support smaller companies, a critical component of India’s economic recovery. This expectation has sent ripples of optimism through the broader markets, leading to stronger performances from stocks outside the large-cap indices.
A key factor contributing to the strong showing in mid and small-cap stocks is the renewed focus on sectors that were previously underperforming. As the market eyes potential changes in fiscal policy, smaller companies in sectors like financial services, infrastructure, and technology could see an uptick in investments.
Sectoral Performance: Financials and Oil & Gas Lead, Auto Sector Lags
The sectoral landscape showed mixed results. Financial stocks, particularly from the banking and insurance sectors, led the charge. Bajaj Finance, a prominent name in the financial services sector, surged significantly on the day, trading at 7,939.15, marking a 2.31% increase. This reflects a growing sentiment in the market that the financials sector will play a key role in the upcoming budget.
The oil and gas sector also had a positive day, with key stocks like Reliance Industries and Oil & Natural Gas Corporation (ONGC) posting gains. Crude oil prices have been somewhat steady, and the optimism in the sector is largely driven by hopes for policy measures that will support energy companies.
In contrast, the auto sector faced challenges, with stocks from major automakers like Maruti Suzuki and Tata Motors facing downward pressure. Rising input costs, along with weaker demand in some segments, have led to the auto sector underperforming compared to other sectors.
Anticipation Builds for Union Budget 2025
As the expiry of the January futures and options contracts approaches, the focus is shifting towards the Union Budget, which is expected to be presented by Finance Minister Nirmala Sitharaman in the coming weeks. Investors are hoping for a budget that strikes a balance between promoting growth and maintaining fiscal discipline.
The market’s attention is on potential growth-boosting measures that could provide a much-needed boost to both large and small businesses. Furthermore, there is speculation that the government may introduce policies aimed at supporting the export sector, which has seen mixed results recently.
“The market is looking for clarity from the budget,” says Karkera. “There is hope that it will provide the right push for the economy.”
With the uncertainty of the global environment hanging in the balance, the budget could serve as a beacon of stability and confidence for investors, potentially making or breaking market sentiment for the coming months.
