Sensex rallies 741 pts Nifty ends above 23,500

Benchmark Sensex jumped 741 points while Nifty rallied to close above 23,500 on Friday on heavy buying in Larsen & Toubro post its Q3 results and the Economic Survey predicting a pro-growth Budget.

Rallying for the fourth day running, the 30-share BSE Sensex ended 740.76 points or 0.97 per cent higher at 77,500.57.

During the day, it jumped 846.15 points or 1.10 per cent to 77,605.96.

The NSE Nifty rallied 258.90 points or 1.11 per cent to 23,508.40.

During the day, it climbed 297.3 points or 1.27 per cent to 23,546.80.

India is expected to record GDP growth of 6.3-6.8 per cent in 2025-26 on the back of strong fundamentals, calibrated fiscal consolidation and stable private consumption, said the Economic Survey 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 balance of these considerations, we expect that the growth in FY26 would be between 6.3 and 6.8 per cent," the survey said.

From the 30-share blue-chip pack, Larsen & Toubro climbed 4.31 per cent after the infrastructure and engineering major reported 14 per cent rise in consolidated profit after tax to Rs 3,359 crore for the December quarter on the back of higher revenue from operations.

Nestle surged 4.25 per cent after the FMCG major reported 4.94 per cent increase in net profit at Rs 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.

ITC Hotels, Bharti Airtel, Bajaj Finserv, Bajaj Finance and ICICI Bank were among the laggards.

In the month of January, the BSE benchmark declined 638.44 points or 0.81 per cent, while the Nifty lost 136.4 points or 0.57 per cent.

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 analysis of daily index returns between 2000 and 2024, revealing that in 22 instances when the S&P 500 corrected by more than 10 per cent, the Nifty 50 posted a negative return in all but one case, averaging a 10.7 per cent decline.

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

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

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

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