Bulls back on Dalal Street; auto, banks, IT stocks drive Sensex 1,436 points higher

The start of the new year has seen a strong comeback by the bulls on Dalal Street. After rising around 0.5 per cent on Wednesday, benchmark indices jumped over 1.8 per cent on Thursday, on the back of strong buying in automotive, technology and banking stocks.

The BSE Sensex surged 1,436 points to close at 79,943.71 levels and the broader NSE Nifty50 gained 446 points to end the session at 24,188.65.

"The automotive sector spearheaded the advance, buoyed by robust December sales figures, while IT stocks gained momentum on positive third quarter earnings forecasts. Financial stocks made substantial contributions, bolstered by banks' impressive quarterly deposit growth reports," pointed out Devarsh Vakil, deputy head of retail research, HDFC Securities.

Barring Sun Pharma, which declined 0.6 per cent, the rest of the 29 shares in the 30-share Sensex ended higher on Thursday. The BSE Auto index was up 3.7 per cent, with Eicher Motors jumping 8.7 per cent and Ashok Leyland up around 6 per cent. Maruti Suzuki accelerated 5.5 per cent and Mahindra and Mahindra, TVS Motor and Bajaj Auto were all up around 4 per cent.

Kapil Singh, research analyst at Nomura, noted that passenger vehicle sales in December had been ahead of estimates.

"We believe for passenger vehicles, the retails will likely be higher than wholesales as usually OEMs clear off stocks in December with year-end discounts. Thus, inventory may have come down to around two weeks," he said.

Financial services stocks were also major gainers on Thursday led by the Bajaj twins. Bajaj Finserv and Bajaj Finance surged 8 per cent and 6.50 per cent respectively; Kotak Bank and IndusInd Bank were up over 2 per cent and Axis Bank rose around 1.3 per cent.

Tech stocks also saw a lot of buying interest, with Infosys surging 4 per cent, HCL Technologies up 3 per cent, and TCS and Tech Mahindra rising over 1 per cent as investors were upbeat on their growth revival.

The October-December quarter is typically a muted quarter for software services companies, given the holiday season in key markets like the United States and Europe. However, analysts are more optimistic on the sectoral earnings gaining momentum after tepid growth over the last year.

"Improvement in growth momentum on year-on-year basis is likely to continue in Q3, on the back of recovery in BFSI (banking, financial services and insurance), lower project cancellations, beginning of interest rate cut cycle, and end of uncertainties around US elections, albeit gradually," said Dipesh Mehta of Emkay Global Financial Services.

Recent upgrade in revenue guidance by Accenture lends some credence to the revenue uptick that consensus has built-in for financial year 2026, he added.

"India’s medium to long term outlook remains robust driven by strong macro fundamentals deleveraged corporate balance sheets, robust asset quality, fiscal discipline, favourable demographics, digitisation, rising income levels, etc," said Mirae Asset Mutual Fund in its annual outlook.

The asset manager expects earnings growth to be a key driver of returns in 2025. After four years of healthy double-digit growth, earnings growth in the current financial year is expected to close in single digits. However, looking beyond 2024-25, consensus estimates see a double-digit earnings growth in 2025-26 and 2026-27 financial years, Mirae Asset noted.