Benchmark indices Nifty and Sensex started strong on January 14, breaking a four-day losing streak, as investors welcomed CPI inflation cooling to a four-month low of 5.22 percent. Experts anticipate further easing inflation, potentially paving the way for the RBI MPC to cut policy rates by 25 basis points in February amid signs of slowing growth.

As a result, metal and PSU bank stocks were the major gainers while IT stocks opened in red led by a poor Q3 from HCL Tech. This comes just a day after the frontline indices plunged over a percent each, eroding Rs 12.39 lakh crore in market cap.

At about 11 am, the Sensex was up 461.45 points or 0.60 percent at 76,791.46, and the Nifty was up 162.80 points or 0.71 percent at 23,248.75. About 2,498 shares advanced, 836 shares declined, and 92 shares unchanged.

Market analysts believe the market is slightly oversold, indicating the potential for a near-term rebound. However, such a recovery is unlikely to hold due to persistent headwinds, including 10-year US bond yields exceeding 4.7 percent, uncertainty surrounding Trump’s actions post-January 20, India’s economic slowdown, weak corporate earnings, and a sharp rise in crude prices.

However, challenges such as robust US labour market data (NFP) and a rising dollar index remain, potentially undermining hopes of fewer Federal Reserve rate cuts in 2025. These factors have triggered substantial fund outflows from emerging markets, including India, intensifying pressure on the broader market. For now, market direction depends heavily on the ongoing earnings season, which, if underwhelming, could deepen the prevailing negative sentiment.

Mid- and small-caps witnessed a much-needed respite with gains of 1.33 percent and 0.8 percent, respectively. Aishvarya Dadheech, CIO and Founder of Fident Asset Management says that some pain could continue in the mid and small-cap segments, although the Nifty and large caps may be entering oversold territory. The broader market has had a terrible start to the new year, falling nearly 10 percent already.

Among sectoral indices, Nifty IT was the major laggard with losses of over a percent. This comes following HCL Tech's Q3 disappointed investors. Nifty FMCG also slipped 0.6 percent led by HUL, Nestle and Britannia. PSU Bank index snapped its four-day losing streak to rocket nearly 2 percent led by the likes of SBI and Bank of Baroda. Nifty Realty, which crashed 6 percent yesterday, gained over 1 percent on January 14. Auto, Nifty Bank and Oil and Gas also gained 1 percent each.

HCL Tech shares plunged 5 per cent after brokerages remained on the sidelines after industry major HCLTech's Q3 earnings, though in line with expectations, failed to deliver upside triggers. While the management commentary over deal wins remained upbeat, the marginal revision in revenue growth guidance hinted at a weaker Q4 for HCLTech, leaving brokerages disappointed.

BSE shares rose over 4 per cent after international brokerage Jefferies upgraded its rating on Asia's oldest bourse to 'hold'. According to the brokerage, BSE stands to benefit from strong growth tailwinds for India's capital markets. Further, the strong nominal growth in the earnings for Indian listed companies' corporate earnings acts as a powerful compounder.

Defence major Bharat Electronics shares rallied 2 per cent after the company secured additional orders worth Rs 561 crores. The orders include communication equipment, electro-optics, upgrades for the satcom network, radar & fire control system, spares, services etc. With these orders, the company has now accumulated orders totalling Rs 10,362 crore in the current financial year.

"After a positive opening, Nifty can find support at 23,000 followed by 22,900 and 22,800. On the higher side, 23,250 can be immediate resistance, followed by 23,400 and 23,500," Hardik Matalia, Derivative Analyst at Choice Broking said. "The charts of Bank Nifty indicate that it may get support at 47,900 followed by 47,500 and 47,300. If the index advances further, 48,400 would be the initial key resistance, followed by 48,700 and 49,000," he added.

NTPC, Hindalco, Tata Motors, SBI, and Bajaj Finance were the top gainers on the Nifty. HCL Tech, HUL, Tech Mahindra, Britannia Industries and TCS were the major laggards.