Stock market today: Nifty 50, Sensex surge over 0.5% each ahead of Donald Trump’s inauguration; banks top gainers

Indian Stock Market: A strong rally in banking and metal stocks has propelled the Indian markets to close higher at the end of Monday’s session (January 20). Apart from the strong earnings reported by Kotak Mahindra Bank and IT major Wipro, positive global cues also supported the bulls during the session.

The Nifty 50 ended the session with a gain of 0.61% at 23,344, while the Sensex closed at 77,073, marking a 0.59% increase from the previous close.

The broader market continues to exert its dominance over frontline indices, as both the Nifty Midcap 100 and Nifty Smallcap 100 indices outperformed the benchmark indices for the fifth consecutive trading session. The former ended today’s session with a gain of 0.91%, while the latter performed even better, wrapping up the session with a surge of 1.09%.

Commenting on today’s market performance, Vinod Nair, Head of Research, Geojit Financial Services said, “A strong positive sentiment from Asian markets bolstered domestic markets, starting the week on a healthy note. Further, a robust initial set of earnings from the banking and financial sectors triggered a broad-based rally, driven by the likelihood of improved earnings in the near future.”

“However, uncertainties surrounding Trump’s policies continue to linger, with investors eagerly waiting for more clarity. Oil prices remaining high is another key concern,” he added.

Meanwhile, Donald Trump is set to be sworn in as the 47th US president on Monday, beginning his second term in the White House. His economic policies are aimed at making American businesses more competitive on a global scale. During his first term, he imposed tariffs on major trading partners, primarily China, and this is expected to continue during his second term, as he had already proposed significant tariff hikes on China and other trading partners, including Mexico and Canada.

While his win in the election initially boosted a strong rally in risky assets across major global markets, concerns over his tariff plans have raised fears that they could ignite a rise in inflation and potentially lead to trade wars, which have stalled the rally in the past month.

US Federal Reserve officials are also concerned about the inflationary impacts of Trump’s policies. However, recent data showing cooling inflation in the US has reignited bets on rate cuts.

Among major asset classes, cryptocurrency major Bitcoin has been on an upward trend ever since Trump’s victory. Today, it touched another record level of $109,241.

Trump became an ardent supporter of the digital assets industry on the campaign trail, after once branding Bitcoin a scam. He has pledged to make the US the world’s crypto capital through policies that include the establishment of a strategic Bitcoin stockpile.

Sectoral Performance: Banks shine, auto stocks lag behind

The strong performance by Kotak Mahindra Bank has boosted sentiment in the banking space, resulting in a sharp rally across all major banking counters. Eight out of the 10 constituents of the Nifty Private Bank index ended the session in the green, resulting in a gain of 2.38%. Kotak Mahindra Bank emerged as the top performer with a stellar gain of 9.21%, settling at ₹1,920 apiece.

Today’s surge was the stock’s biggest one-day rally since October 2021. Similar to the private sector banks, PSU banksalso performed well in the session, as the Nifty PSU Bank index jumped nearly 2%, with 12 stocks in the index ending in the green.

On the other hand, the strong support from Wipro helped the Nifty IT index close in the green, following the significant sell-off seen in the index during the previous trading session. 

The metal stocks, on the other hand, extended their bull run to the third consecutive today, as the latest conversation between Donald Trump and Xi Jinping has raised hopes for easing US-China tensions. This is likely to support metal prices, as Beijing remains the biggest consumer of many industrial metals. Amid this optimism, the Nifty Metal index ended the trade with a surge of 1.08%. 

On the negative side, Nifty Auto was the top sectoral laggard, dropping 0.52%, followed by Nifty FMCG, which saw a mild drop of 0.11%.

Nifty 50: Key levels and trends

Shrikant Chouhan, Head of Equity Research, Kotak Securities, said, “Today, the benchmark indices witnessed positive momentum, with the Nifty ending 142 points higher while the Sensex was up by 454 points. Among sectors, the Private Bank index gained over 2 percent, whereas intraday profit booking was seen in auto and selective FMCG stocks. Technically, after an early morning intraday correction, the market took support at 23170/76600 and bounced back sharply. On daily and intraday charts, it has formed a higher bottom formation, which supports a further uptrend from the current levels.”

“We are of the view that 23170/76600 will act as a key support zone for day traders. If it sustains above this level, it could bounce back to 23450-23500/77300-77500. However, if it falls below 23170/76600, the uptrend would be vulnerable. Below this level, traders may prefer to exit their long positions,” Shrikant added.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.