Benchmark indices Nifty and Sensex started the session on a strong footing, driven by gains in banking and auto stocks, while healthcare stocks lagged in negative territory. The small-cap index, which outperformed the frontline indices, pared all gains to trade flat. However, trading volumes were muted, reflecting the year-end holiday lull as investors closed their books for the year.

Market experts suggest that looking ahead to 2025, the focus is now on the US Federal Reserve’s interest rate decisions and potential shifts in tariff policies from Donald Trump, when he assumes office on January 20.

At about 10 am, the Sensex was up 510.35 points or 0.65 percent at 78,982.83, and the Nifty was up 169.85 points or 0.72 percent at 23,920.05. About 1876 shares advanced, 1223 shares declined, and 130 shares unchanged

"With no major triggers in the near term, markets are likely to consolidate in a broad range. Investors will closely monitor earnings revival in Q3, as it will be the next significant factor for driving the markets," Siddharth Khemka, Head of Research and Wealth Management at Motilal Oswal Financial Services said.

Experts say that the broader market trend remains positive, with the current correction seen as healthy and part of an ongoing uptrend rather than a shift to a bearish phase.

In the morning, Nifty Auto was the brightest spark, rising up over 2 percent led by four-wheelers and two-wheelers. The sharp rally comes after DAM Capital upgraded its ratings on several auto stocks, highlighting potential recovery despite near-term challenges. Tata Motors has been upgraded to "Buy" from "Neutral", Escorts to "Buy" from "Neutral" with a target of Rs 3,550, and Bajaj Auto to "Buy" from "Sell" with a target of Rs 9,750.

Lenders, both private and public also rose with Nifty Bank rising almost a percent. HDFC Bank, SBI, and ICICI Bank rose to 1 percent. Nifty Metal, Pharma and Consumer Durables also gained in early trade.

Nifty Realty was the sole laggards, falling 0.4 percent in the morning.

The broader market showcased a decent start.  While the midcap index rose 0.2 percent, the smallcap index pared all gains to trade flat. A host of market experts say that action in the broader market is largely stock-specific and investors should exercise caution and choose stocks that have earnings visibility and attractive valuations. The midcap 100 and smallcap 100 indices have fallen just 5 percent in the last three months. Nifty, on the other hand, has tanked nearly 10 percent.

As for individual stocks, private lender IndusInd Bank shares gained 2 percent after it announced the sale of its microfinance institution (MFI) retail loan pool, which has an outstanding value of Rs 1,573 crore, reports CNBC-TV18. The bank is offering the entire pool on a 100 percent cash basis, aiming to optimise its balance sheet and improve liquidity.

Jubilant FoodWorks rose 1 percent after it entered into a Memorandum of Understanding (MoU) with Coca-Cola India for the purchase of a portfolio of sparkling beverage products and certain other products from The Coca-Cola Company’s authorized bottlers. The marketing activities for these products will be undertaken in the usual/ordinary course.

Gensol Engineering shares rallied almost 8 percent after it secured an EPC contract worth Rs 897.47 crore from NTPC Renewable Energy Development for 225 MW grid-connected solar PV projects at GSECL Solar Park (Stage-III), Khavda, Gujarat. The project includes three years of operation and maintenance.

"As we approach the final days of the calendar year, this consolidation phase is likely to persist. For now, the trading range is marked by strong support at 23,600–23,500, while stiff resistance is observed around 23,900–24,000," Sameet Chavan, Head of Technical Research at Angel One, said. He added that a decisive directional move is expected only upon breaking out of this key zone. Traders are advised to monitor these levels closely and align their strategies accordingly. While the major indices remain range-bound, stock-specific trades continue to present lucrative opportunities for outperformance, warranting continued focus.

Bajaj Auto, Tata Motors, Eicher Motors, IndusInd Bank, and M&M were the top gainers on the Nifty. TCS, Power Grid, HCL Tech, Shriram Finance, and Apollo Hospital were the major laggards.