Market Wrap, January 31: SENSEX rallies 741 pts, NIFTY50 ends above 23,500 post Economic Survey release; L&T jumps 4%

The 30-share BSE SENSEX ended 740.76 points, or 0.97%, higher at 77,500.57. During the day, it jumped 846.15 points, or 1.10%, to 77,605.96. The NSE NIFTY50 index rallied 258.90 points, or 1.11%, to 23,508.40. During the day, it climbed 297.3 points, or 1.27%, to 23,546.80.

India is expected to record GDP growth of 6.3-6.8% in 2025-26 on the back of strong fundamentals, calibrated fiscal consolidation, and stable private consumption, according to the Economic Survey 2024-25 tabled in Parliament on Friday.

"...the fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption. On the balance of these considerations, we expect that the growth in FY26 would be between 6.3 and 6.8%," the survey said.

The infra giant received its highest-ever quarterly orders of ₹ 116,036 crore at the group level, registering a substantial YoY growth of 53%.

Nestle surged 4.25% after the FMCG major reported a 4.94% increase in net profit at ₹688.01 crore for the quarter ended December 31, 2024.

IndusInd Bank, Titan, Tata Motors, Tata Steel, ITC, and Maruti were the other major gainers.

In January, the BSE benchmark declined 638.44 points, or 0.81%, while the Nifty lost 136.4 points or 0.57%.

Broader Market

The BSE MidCap index ended at 43,096.45, up 747.09 points, or 1.76%, and the BSE SmallCap index was trading at 49,958.39, up 899.22 points, or 1.83%.

Sector Watch

All sectoral indices ended in the green with the capital goods stocks leading the gains.

The BSE CAPITAL GOODS index ended at 64,529.77, up 2,417.47 points, or 3.89%. The BSE Industrials closed the session at 13,831.76, up 481.82 points, or 3.61%.

Sounding a note of caution on the elevated stock market valuation, the Economic Survey on Friday said any correction in the US markets could have a cascading effect in India, which has witnessed increased participation from young investors post-COVID.

Over the past few years, retail participation, especially from young investors, has significantly increased in the equity markets. Investor participation has grown from 4.9 crore in FY20 to 13.2 crore as of December 31, 2024.

"Elevated valuations and optimistic market sentiments in the US raise the likelihood of a meaningful market correction in 2025. Should such a correction occur, it could have a cascading effect on India, especially given the increased participation of young, relatively new retail investors.

"Many of these investors that have entered the market post-pandemic have never witnessed a significant and prolonged market correction. Hence, if one were to occur, its impact on sentiment and spending may be non-trivial," the survey noted.

According to the survey, the rise in retail participation aligns with a steady decline in the five-year rolling beta between the Nifty 50 and the S&P 500 in the last four years, suggesting a reduced sensitivity of Indian markets to US market movements.

"Even as the resilience demonstrated by the Indian market, supported by growing retail participation, is promising, the risks associated with a potential US market correction cannot be overlooked, given historical trends," the Economic Survey 2024-25 said.

Historical data suggests that the Indian equity market has been notably sensitive to movements in the US market. The Nifty 50 has historically shown a strong correlation with the S&P 500, with an analysis of daily index returns between 2000 and 2024 revealing that in 22 instances when the S&P 500 corrected by more than 10%, the Nifty 50 posted a negative return in all but one case, averaging a 10.7% decline.

On the other hand, during 51 instances when the Nifty 50 experienced a correction of over 10%, the S&P 500 exhibited positive returns in 13 instances, with an average return of -5.5%.

In Asian markets, Tokyo settled in positive territory, while Seoul ended lower. Markets in Shanghai and Hong Kong were closed due to holidays.

European markets were trading higher. US markets ended in the positive zone on Thursday.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹4,582.95 crore on Thursday, according to exchange data.

Global oil benchmark Brent crude dipped 0.26% to $76.64 a barrel.

Stock markets will remain open for trading on Saturday, February 1, due to the Union Budget 2025-26 presentation.