Benchmarks rebound on value buying, Nifty regains 22,950 mark

Key equity benchmarks staged a rebound on Tuesday, snapping a two-day losing streak, after the Reserve Bank of India (RBI) announced measures to enhance liquidity in the banking system. The benchmark Nifty index closed above the 22,950 mark, driven by gains in realty and financial services stocks, benefiting from the improved liquidity conditions.

However, the broader market underperformed, with midcap and smallcap indices correcting by 0.6% and 1.7%, respectively. This divergence suggests that investor optimism remains cautious, with concerns about the broader economic outlook persisting.

The S&P BSE Sensex surged 535.24 points or 0.71% to 75,901.41. The Nifty 50 index advanced 128.10 points or 0.56% to 22,957.25.

Bajaj Finance (up 4.39%), Axis Bank (up 3.82%), Bajaj Finserv (up 3.28%), HDFC Bank (up 2.51%) and ICICI Bank (up 1.54%) boosted the indices.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index shed 0.61% and the S&P BSE Small-Cap index slipped 1.77%.

The market breadth was weak. On the BSE, 1,308 shares rose and 2,666 shares fell. A total of 110 shares were unchanged.

Economy:

The Reserve Bank of India on Monday said it will purchase government securities worth Rs 60,000 crore in three tranches and announced several other steps to inject liquidity into the banking system. As part of measures to manage liquidity conditions, the central bank also announced a USD/INR buy/sell swap auction of USD 5 billion for a period of six months to be held on January 31, 2025. To inject liquidity, RBI said open market operations (OMO) purchase auctions of Government of India securities for an aggregate amount of Rs 60,000 crore in three tranches of Rs 20,000 crore each will be held on January 30, February 13, and February 20.

Numbers to Track:

The yield on India's 10-year benchmark federal paper declined 0.22% to 6.777 as compared with the previous close of 6.792.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 86.5600, compared with its close of 86.3100 during the previous trading session.

MCX Gold futures for the 5 February 2025 settlement were added 0.44% to Rs 79,930.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was up 0.57% to 107.95.

The United States 10-year bond yield rose 0.77% to 4.568.

In the commodities market, Brent crude for March 2025 settlement rose 58 cents or 0.75% to $77.66 a barrel.

Global Markets:

European shares gained on Tuesday recovering from a global sell-off, triggered by concerns that a potential artificial intelligence breakthrough in China could present a significant challenge to Western AI companies.

Asian stocks ended mixed, following a sharp decline on Wall Street. Fears of overvalued artificial intelligence (AI) companies triggered the sell-off after a Chinese startup, DeepSeek, released a cost-effective AI model, raising concerns about the sustainability of current valuations.

Many Asian markets, including China and South Korea, were closed for the Lunar New Year holiday.

On Monday, the S&P 500 and Nasdaq 100 plummeted 1.46% and 3.07%, respectively. The Dow Jones Industrial Average, however, gained 0.65%, reaching a one-month high.

The US dollar strengthened against all Group-of-10 currencies after the President announced plans to impose tariffs on foreign-produced semiconductors, pharmaceuticals, and certain metals to incentivize domestic manufacturing.

Leading AI companies experienced significant losses. NVIDIA, a prominent figure in the AI boom, saw a nearly 17% drop in its stock price. Advanced Micro Devices (AMD) declined by 6.4%. Broadcom Inc. and Oracle Corporation also suffered substantial losses, falling by 17.4% and 14%, respectively.

DeepSeek, a Chinese AI startup, recently unveiled its latest model, R1. This model is claimed to be comparable in performance to leading US models like OpenAI's ChatGPT but at a considerably lower cost. DeepSeek was founded by Liang Wenfeng, the head of High Flyer, an AI-driven quantitative hedge fund. The company focuses on developing open-source AI models, allowing the wider developer community to inspect and improve the software.

DeepSeek's mobile app surged to the top of the US iPhone download charts shortly after its release in January.

Stocks in Spotlight:

Anant Raj plummeted 20% to Rs 534.45 today, mirroring a broader sell-off in the global technology sector. This sharp decline was triggered by the launch of DeepSeek, a new, low-cost AI model by a Chinese startup, sparking concerns among investors about increased competition. While primarily known for its real estate developments, Anant Raj has been expanding its presence in the burgeoning AI market through its subsidiary, Anant Raj Cloud. The company in July 2024 announced a high-profile collaboration with Google to develop advanced AI solutions, further solidifying its commitment to the sector.

Cipla rallied 2.16% after the pharma major's consolidated net profit jumped 48.73% to Rs 1,570.51 crore in Q3 FY25 as against Rs 1,055.90 crore reported in Q3 FY24. Total revenue from operations grew by 7.10% year on year (YoY) to Rs 7,072.97 crore in the quarter ended 31 December 2024.

Union Bank of India rallied 4.73% after the company's standalone net profit jumped 28.24% to Rs 4,603.63 crore in Q3 FY24 compared with Rs 3589.91 crore posted in corresponding quarter last year. Total income increased 7.68% YoY to Rs 31,374.50 crore in Q3 FY25.

Federal Bank declined 3.61% after the private lender's standalone net profit decreased 5.1% to Rs 955.44 crore in Q3 FY25 from Rs 1,006.74 crore posted in same quarter last year. However, total income increased 38.13% year on year (YoY) to Rs 7,724.90 crore in the December 2024 quarter. Profitability was impacted by a 220.47% jump in provisions (excluding tax provisions), which rose to Rs 292.33 crore in the December 2024 quarter, compared to Rs 91.22 crore in the same period last year. The provisioning coverage ratio (PCR) jumped to 74.21% as of 31 December 2024 compared to 71.08% as of 31 December 2023.

Greenlam Industries rose 1.56% after the company said its board will consider the proposal of a bonus issue on Jan 30.

360 One WAM (down 5.17%), IIFL Finance (down 2.04%) and IIFL Capital Services (down 1.33%)declined after media reports revealed that tax officials raided their offices.

Tata Steel rose 1.82%. The company's consolidated net profit declined 43.4% to Rs 295 crore in Q3 FY25 as compared with Rs 522 crore in Q3 FY24. Revenue from operations fell 5% YoY to Rs 32,760.45 crore

Coal India declined 1.19% after the company reported a 17.04% decrease in consolidated net profit to Rs 8,505.57 crore in Q3 FY25 from Rs 10,253.48 crore in Q3 FY24. Revenue from operations fell 1.03% to Rs 35,779.78 crore in the third quarter of FY25 from Rs 36,153.97 crore recorded in the same period last year.

Bajaj Housing Finance advanced 5.01% after the company reported a 25.41% rise in net profit to Rs 548.02 crore on a 25.82% increase in revenue from operations to Rs 2,448.98 crore in Q3 FY25 as compared with Q3 FY24. Net Interest Income (NII) for Q3 FY25 stood at Rs 806 crore, up 24.96% as against Rs 645 crore in Q3 FY24.

Kaynes Technology India dropped 11.44% after the company revised its revenue growth guidance for the current fiscal year downwards. The company reported a strong 47% jump in net profit to Rs 66.5 crore in the December quarter (Q3FY25) from Rs 45.2 crore in the same period last year. Revenue grew by nearly 30% to Rs 661.2 crore in Q3FY25, up from Rs 509.30 crore in the corresponding quarter of the previous year. However, the management lowered its revenue guidance for FY25 to Rs 2,800 crore from the earlier target of Rs 3,000 crore.

Greaves Cotton rallied 2.78% to Rs 253.15 after Porinju Veliyath's Equity Intelligence India Private acquired a stake in the company through bulk deal on 27 January 2025. Equity Intelligence India Private acquired 12,51,900 shares, representing a 0.51% stake, through a bulk deal at an average price of Rs 234.63, amounting to Rs 29.37 crore.

TVS Motor Company gained 4.85% after its standalone net profit rose 4.24% to Rs 618.48 crore on 10.33% increase in revenue from operations to Rs 9,097.05 crore in Q3 FY25 over Q3 FY24. The overall two-wheeler and three-wheeler sales including exports grew by 10% YoY registering 12.12 lakh units in the quarter ended December 2024.

Hyundai Motor India 1.27% after it reported 18.6% fall in net profit to Rs 1,160.73 crore on a 1.3% decline in revenue to Rs 16,647.99 crore in Q3 FY25 as compared with Q3 FY24. Domestic sales accounted for 77.8% of the revenue and the remaining 22.2% was from exports.

Apar Industries hit a lower circuit of 20% after its consolidated net profit declined 19.6% to Rs 174.92 crore in Q3 FY25 as against Rs 217.57 crore posted in a similar quarter the previous year. Revenue from operations rose 17.66% year on year (YoY) to Rs 4,716.42 crore in the quarter ended 31 December 2024.

Emami added 3.76% after the company's consolidated net profit jumped 7.03% to Rs 278.98 crore on a 5.34% increase in revenue from operations to Rs 1,049.48 crore in Q3 FY25 over Q3 FY24.

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