Sensex, Nifty today: Why stock market is up; January outlook

Buying in interest rate-sensitive stocks of banking and auto majors such as ICICI Bank Ltd, Mahindra & Mahindra Bank Ltd, Tata Motors Ltd and HDFC Bank Ltd helped benchmark indices Sensex and Nifty rise in Friday's trade, the first day on January futures and options (F&O) series. Global markets across Japan, China and Taiwan were up, and at home, there were reports that the government may consider cutting personal income tax to lift consumption in the forthcoming Union Bank on February 1.

The BSE Sensex hit the 79,000 level and was later trading at 78,990.40, up 517.92 points or 0.66 per cent. Nifty stood at 23,919.95, up 169.75 points or 0.71 per cent. IndusInd Bank was the top Sensex gainer, rising 3.48 per cent to Rs 964.55. Tata Motors Ltd jumped 3 per cent to Rs 763 apiece. M&M, Bajaj Finance Ltd and Maruti Suzuki India, advanced 1.8-2.5 per cent. Bajaj Finserv, Bharti Airtel, ICICI Bank Ltd, NTPC and Reliance Industries Ltd rose up to 1.2 per cent.

"January typically tends to be a slower month according to the past decade’s seasonality, with Nifty often closing in the red 70 per cent of the time. Nifty Bank has shown mixed performance, with a 50 per cent chance of closing on either side. We believe that Nifty will struggle to surpass the 24,350 mark and will likely remain a sell-on-rally until strong FII participation returns," Nuvama Institutional Equities said.

The brokerage remains bullish on MSCI’s 25 probable names, such as Coforge Ltd and One 97 Communications Ltd (Paytm). "Also, Zomato which is a high conviction Nifty 50 entrant in March 25 should start moving up. On the short side, we see potential weakness in the IT sector, with top short candidates including TCS and Mphasis. We also favour shorts in DMart and Hindalco," it said.

Fear gauge India VIX, which suggests volatility in the market over the next 30 days, fell 5.77 per cent to 13.23.

"Short-term bumps on the economic growth path will cause corrections and market volatility like what we are witnessing now. The strongest headwind for the market now is the FIP selling triggered by strong dollar (dollar index staying above 108) and attractive US bond yields with the 10-year yielding 4.35 per cent. A change in FII strategy from selling to buying will happen when macros indicate recovery in growth and corporate earnings," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.