Closing Bell: Nifty above 23,700, Sensex rises 368 pts; auto stocks rally

The BSE Sensex saw a sharp rally on the first trading session of 2025, surging 617.48 points, or 0.79%, to reach 78,756.49. The NSE Nifty also rose by 178 points, or 0.75%, settling at 23,822.80, after a subdued opening.

The market saw a turnaround as strong December auto sales figures and growing optimism about the upcoming Union Budget lifted investor sentiment. Here are the key factors driving the rally:

Robust December Auto Sales: Auto stocks emerged as some of the top performers, thanks to impressive sales data for December, a traditionally slow month for vehicle demand. Maruti Suzuki led the gains, rising over 3% after reporting a 30% year-on-year increase in December sales, reaching 178,248 units compared to 137,551 units a year ago. Mahindra & Mahindra also posted strong sales, with a 18% increase in SUV sales, delivering 41,424 units, up from 35,174 units in the same period last year. These better-than-expected numbers point to a resurgence in consumer demand.

Optimism Ahead of Union Budget: Investor expectations for a growth-focused Union Budget to be presented on February 1, 2025, provided an additional boost to market sentiment. Hopes are high for economic stimulus measures, including tax relief for middle-income earners and changes to Securities Transaction Tax (STT). Moreover, expectations of a potential interest rate cut by the Reserve Bank of India (RBI) in February further supported the market rally.

Recovery in Banking Stocks: Banking stocks contributed to the rally, with HDFC Bank and Axis Bank each climbing over 1%. Their recovery helped strengthen the overall indices.

According to Anand James, Chief Market Strategist at Geojit Financial Services, while momentum is still picking up, the Nifty is expected to trade within the range of 23,710 to 23,580 in the near term. If momentum accelerates unexpectedly, a rise to 24,025 could be possible, although the probability remains low.

Disclaimer: Users are advised to consult certified experts before making investment decisions.