Indian equity markets concluded the trading session with mixed results as sectoral divergence dominated investor sentiment. The Nifty 50 managed to sustain its momentum above the 26,000 mark with a slim gain of 0.06% to close at 26,146, while the Sensex ended marginally lower by 32 points at 85,188.

Market breadth remained constructive for the second straight session, with an advance-decline ratio of 1.14 on the BSE, indicating that stock-specific opportunities continued to drive early January trading activity. Auto, Realty, and Metal stocks witnessed healthy buying interest, though gains were capped by sharp declines in FMCG heavyweights.

Sectoral Performance Highlights

The Auto Index emerged as the standout performer, rallying 1% on positive market expectations. In stark contrast, the FMCG Index faced significant pressure, shedding over 3% during the session.

Banking Sector Reports Robust Q3 Business Growth

Several major banks released their Q3 business updates, showcasing strong operational performance across key metrics:

Other financial services companies also reported positive developments, with SG Finserve posting impressive loan book growth of 105% year-on-year to ₹3,211.00 crore as of December 31.

Auto Sector Delivers Strong December Sales

The automobile sector continued its positive momentum with robust December sales figures:

TVS Motor Performance:

• Total sales surged 50% to 4.81 lakh units year-on-year
• Two-wheeler sales increased 48% to 4.61 lakh units
• Three-wheeler sales doubled with 110% growth to 20,318 units
• EV sales jumped 77% to 20,318 units
• Q3 sales rose 27% to 15.40 lakh units

Hero MotoCorp Results:

• Total sales climbed 40% to 4.56 lakh units year-on-year
• Motorcycle sales grew 34.80% to 4.02 lakh units
• Domestic sales increased 42.50% to 4.19 lakh units
• Q3 total sales advanced 15.90% to 16.90 lakh units

Major Corporate Developments

Several significant corporate announcements shaped market sentiment:

Merger Activity: Sapphire Foods announced its merger with Devyani International, effective April 1. Sapphire shareholders will receive 177 Devyani shares for every 100 Sapphire shares held, based on the approved swap ratio.

Operational Updates: Olectra Greentech commenced commercial operations of phase-1 of its Greenfield EV manufacturing facility in Hyderabad on December 31, with an annual per shift production capacity of 2,500 buses.

Order Wins: Railtel Corp secured a letter of acceptance for a ₹56.70 crore order from Assam Health Infrastructure Development & Management Society.

Currency and Derivatives Market

The Indian rupee had a weak start to the year, opening four paise lower at 89.90 against the US dollar and closing 10 paise down at 89.90. In the derivatives segment, Nifty January futures declined 0.02% to 26,291, trading at a premium of 145 points with open interest down 0.16%.

The mixed market performance reflected the ongoing sectoral rotation, with investors focusing on stock-specific opportunities while monitoring corporate earnings and business updates for directional cues.

Indian equity markets demonstrated resilience in early 2025 trading, with the Sensex rising over 200 points on Friday as investors positioned ahead of the quarterly earnings season. The BSE Sensex gained 0.25% to trade at 85,399, while the NSE Nifty50 added 0.23% to trade above the 26,150 mark on the second trading day of the year.

Market Performance Shows Sectoral Divergence

The latest trading session revealed clear sectoral leadership, with auto stocks emerging as top performers. The sector index climbed 0.8%, driven by impressive December sales data that boosted investor confidence.

However, the session also highlighted significant pressure points, with ITC sliding 5% and extending its steep selloff after a 10% drop in the previous session. The decline stemmed from multiple brokerage downgrades following concerns over earnings pressure from the government's cigarette tax increase.

Broader Market Sentiment Remains Constructive

Despite individual stock volatility, broader market indices showed positive momentum. Small-cap stocks advanced 0.20%, while mid-cap shares gained 0.40%, indicating healthy participation across market capitalizations. The fast-moving consumer goods index fell 1.40%, weighed down primarily by ITC's decline.

Auto Sector Drives Optimism on Strong Sales Data

The impressive 25.80% year-over-year increase in passenger vehicle sales during December has reinforced positive sentiment around the automotive sector. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, emphasized the broader economic implications: "This data confirms the growth momentum in the economy. It has to be watched whether this growth sustains, albeit at a slower pace, going forward."

Technical Outlook and Historical Context

Despite the positive Friday session, markets continue to navigate historical January weakness patterns. Over the past decade, the Nifty has recorded negative January performance eight times compared to just two positive closes, while the Sensex has declined seven times against three positive months.

Technical analysis suggests key levels remain in focus, with resistance at 26,250 and potential upside targets at 26,500. The 50-day exponential moving average at 25,850 continues to provide crucial support for the Nifty.

Investment Opportunities Emerge in Lagging Sectors

Vijayakumar highlighted potential opportunities in the consumer durables segment, which lagged significantly in the previous year. "The beneficial impact of the interest rate cuts and GST cuts are yet to reflect in the demand for consumer durables. In the short-term, this is one segment that has good prospects," he noted.

The combination of earnings season anticipation, strong auto sector performance, and selective opportunities in underperforming segments suggests markets are positioning for potential momentum ahead of the Union Budget scheduled for early February.