Stock market today: Sensex, Nifty 50 turn positive for 2025. Is this rally sustainable? | Stock Market News

Stock market today: With a strong gain of over 1 per cent on Tuesday, February 4, Indian stock market benchmarks—the Sensex and Nifty 50—have turned positive for the year. This rebound comes despite concerns over weak quarterly earnings, foreign capital outflows, and uncertainty surrounding US President Donald Trump’s trade policies.

The Sensex closed 1,397 points, or 1.81 per cent, higher at 78,583.81, while the Nifty 50 settled with a gain of 378 points, or 1.62 per cent, at 23,739.25. For 2025, the Sensex is now up about 0.5 per cent, while the Nifty 50 has gained 0.40 per cent. Notably, this marks the Nifty 50’s first positive month since October last year.

Can this rally sustain its momentum?

Market sentiment appears to be improving after a solid correction in the last few months. The Nifty 50 is still 10 per cent down from its all-time high of 26,277.35, which it hit on September 27 last year.

What the fundamental picture indicates

The healthy gains of key indices on Tuesday might have been driven by short-covering by FIIs (foreign institutional investors) and buying by domestic institutional investors (DIIs). During the first week of every month, there is a significant inflow of money via the SIP route, which leads to strong buying by DIIs despite FIIs remaining net sellers.

The Indian stock market has experienced a huge correction in recent times. As global brokerage firm Jefferies pointed out, it witnessed the second-longest correction of the last ten years.

Recovery is a natural process after steep corrections. However, it would be early to say that the market has hit the bottom and is ready to see a sustainable period of growth.

The focus is on the RBI now. If it starts cutting rate from February, it will be a significant boost to market sentiment.

However, the uncertainty surrounding Donald Trump’s tariff policies and continued foreign capital outflows remain a lingering concern.

Considering these factors, experts say investors should brace for volatility till March-end.

“I don’t see any major decline in the market, but until the end of this month or mid-March, the Indian stock market may remain volatile. By the end of March, the market is likely to bottom out,” G. Chokkalingam, the founder and head of research at Equinomics Research Private Ltd., told Mint.

Chokkalingam pointed out that Budget 2025 has delivered on fiscal prudence, shifting the focus to the RBI. The central bank’s policy decision will be a key trigger for the market.

“The government has compromised on capital expenditure while maintaining fiscal discipline. It appears that the government and the RBI will act in a coordinated manner. With the government having done its part, the onus is now on the RBI to stimulate the economy,” said Chokkalingam.

Chokkalingam believes the RBI will cut rates, which could help the market find a short-term bottom.

“If the rate cut happens in February, the current decline might mark the bottom. Otherwise, the market is likely to bottom out by mid- or late March,” said Chokkalingam.

The market may stabilise after Q4 numbers come out on a healthier side. Indian Inc.’s Q1, Q2, and Q3 earnings so far have shown subdued profitability. Unless the situation improves, the market sentiment may remain fragile.

“We may need to wait another quarter for market stability. If Q3 and Q4 earnings remain stable or show slight improvement, it would confirm that the recent low marked the market bottom,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

“The RBI MPC meeting is scheduled for this week, with expectations of a 25-50 bps rate cut. Such a move would significantly boost the market, especially since the Budget has been broadly positive across sectors,” Tapse added.

India’s macroeconomic outlook also needs to strengthen. The government has delivered a Budget to boost consumption and support economic growth. However, for sustained momentum, all engines must fire. Along with government capex, private expenditure must also pick up pace to drive the economy forward.

“I am still slightly worried about India’s macro picture. This is why the government has tried to push consumption by announcing a consumption-oriented Budget,” said Tapse.

At this juncture, Tapse believes large-cap stocks offer some valuation comfort, presenting an opportunity to accumulate fundamentally strong-quality stocks.

Technical outlook

Anshul Jain, the head of research at Lakshmishree Investment and Securities, underscored that the Nifty 50 broke the 50-DEMA resistance at 23,700, and the 50-stock index is looking set to touch 24,200 by the end of this month.

The BSE Sensex has also made a strong base at 77,500, and on the upper side, the 30-stock index may touch 80,000 in February 2025, said Jain.

Jain believes that heavyweights in banking, IT, and index may attract bulls’ attention throughout this month.

Shrikant Chouhan, the head of equity research at Kotak Securities, pointed out that a bullish candle on the daily charts and an uptrend continuation formation on the intraday charts indicate further upward movement from the current levels.

“We believe that the current market texture is bullish, and ‘buy on intraday dips and sell on rallies’ would be the ideal strategy for day traders. For traders now, 23,600/78,100 and 23,500/77,800 would be the key support zones, while 23,800/78,700-23,850/78,900 could act as key resistance areas for the bulls,” said Chouhan.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.