Benchmark indices Nifty and Sensex kicked off January 16 on a strong note, marking their third consecutive session of gains. Investor sentiment got a boost from cooler-than-expected US inflation data for December, which raised hopes of further rate easing by the Federal Reserve. While PSU bank and metal stocks led the rally, losses in FMCG stocks tempered the momentum.

The stock market mood also turned jubilant as blockbuster Q4 earnings fueled optimism. JPMorgan posted its largest-ever annual profit, BlackRock hit a record $11.6 trillion in assets under management, and Goldman Sachs more than doubled its Q4 profit, underscoring resilience in the financial sector.

At about 9:40 am, the Sensex was up 426.23 points or 0.56 percent at 77,150.31, and the Nifty was up 134.70 points or 0.58 percent at 23,347.90. About 2420 shares advanced, 433 shares declined, and 98 shares unchanged.

Experts say that India may be poised for a relief rally, but its longevity will hinge on key macroeconomic factors, particularly the revival of GDP and earnings growth. While positive budget expectations could provide a short-term boost to the market, the rally’s sustainability will ultimately depend on how GDP and earnings trends unfold.

The market remains fragile, trapped in a cycle of oversold conditions and fleeting technical pullbacks, with no meaningful improvement in fundamentals. Analysts suggest a "sell-on-rise" strategy as uncertainties cloud the horizon, from subdued Q3 earnings and the Union Budget to global headwinds driven by U.S. trade policies under President Trump.

Adding to the gloom, Q3 earnings are expected to fall short of the previous quarter, deepening concerns about the market's trajectory, market analysts believe. Meanwhile, relentless selling by Foreign Institutional Investors (FIIs) underscores their shift toward liquidity, even as large-cap and PSU stocks witness steep corrections.

HDFC Life Insurance emerged as the star performer of the day, soaring 10 percent to hit the upper circuit after delivering a stellar December quarter that surpassed market expectations with impressive earnings growth. This strong showing has bolstered confidence among foreign and domestic brokerages, keeping their outlook on the stock optimistic. Notably, Nomura, which had previously downgraded HDFC Life to "Neutral" in Q2 FY25 due to concerns over surrender value impact, slowing growth, and steep valuations, has reversed its stance, upgrading the stock to "Buy."

Zomato shares were buzzing in trade with gains of nearly 3 percent after Hong Kong-based brokerage CLSA reiterated its 'outperform' rating, adding the firm to its 'high conviction' list, amid the ongoing correction in the stock. The recent correction in the stock price, which has fallen 20 percent from its 52-week high, is an opportunity to invest in the leading player in quick commerce and food delivery.

Shares of Tyre manufacturer CEAT plunged 7.5 percent on January 16 after the company reported a 46.5 percent year-on-year decline in net profit to Rs 97.1 crore for the third quarter ended December 31, 2024. Revenue from operations grew by 11.4 percent to Rs 3,299.9 crore, compared to Rs 2,963.1 crore in Q3 FY24. However, operating performance took a hit, with EBITDA falling 18.3 percent year-on-year to Rs 340.9 crore from Rs 417.5 crore.

The broader market, represented by mid-smallcap indices, mirrored positive trends with gains of 1.6 and 1.5 percent. However, most market experts believe that the space could witness more pain as valuations remain uncomfortable amid uncertainty of third-quarter earnings.

Sectoral indices painted a mixed picture today, with Nifty PSU Bank emerging as a standout performer, climbing over 2 percent, driven by gains in heavyweights like SBI. The broader Nifty Bank index followed suit, opening over 1 percent higher as HDFC Bank, ICICI Bank, and Axis Bank traded firmly in the green. Metal stocks shone brightly, with leaders like Adani Enterprises, Vedanta, and Hindalco propelling the sector upward. Nifty Realty and Auto indices also posted strong gains, each rising over 1 percent, buoyed by impressive performances from Maruti Suzuki, Bajaj Auto, and Tata Motors. However, it wasn’t all rosy, as Nifty Pharma and FMCG indices lagged, trading marginally in the red, reflecting a cautious tone in these defensive sectors.

"The bearish gap around 23,340-23,345 withholds intermediate resilience, with the sturdy obstacle at 23,500-23,600. On the lower end, 23,100-23,000 seems to cushion any shortcomings, while the lower band of ‘Falling wedge’ is expected to remain the sacrosanct support for the time being," Sameet Chavan, Head of Technical and Derivate Research at Angel One said.

He anticipates that market volatility could surge amidst the upcoming weekly expiry, coupled with the current extremely oversold conditions. Given this outlook, it is prudent to adopt a cautious approach when navigating the market, as the potential for sudden price movements increases.

SBI Life Insurance, SBI, Shriram Finance, ONGC, and Hero MotorCorp were the major gainers on the Nifty. Tata Consumer Products, HUL, Cipla, Britannia Industries, and Dr Reddy's were the major laggards on the index.