Sectoral indices showed mixed trends, with banking, IT, pharma, healthcare, and financial services emerging as the day’s top losers, according to data from the NSE.

Ajit Mishra, SVP of Research at Religare Broking Ltd, commented, “The markets paused after a three-day rally, shedding over half a percent. Sectoral trends were mixed, with energy and FMCG sectors ending in the green, while IT and pharma sectors closed in the red. Broader indices reflected the benchmark’s movement, registering a nearly half a percent decline.”

He further explained that the current pullback is a natural pause following recent gains, which may continue until the Nifty surpasses the next resistance level at 24,250 points.

Religare Broking advises investors to focus on stock-specific opportunities aligned with sectoral trends. “In the near term, FMCG, auto, and energy sectors are likely to outperform, and positions should be adjusted accordingly,” the firm suggested.

The Indian stock market started 2025 on a strong note, with the Sensex and Nifty posting solid gains on January 1 and 2. Notably, the benchmarks recorded their best session in six weeks on Thursday.

Krishna Appala, Senior Research Analyst at Capitalmind Research, highlighted the optimism, saying, “The year has begun positively, with the Nifty gaining 1.25% and the Nifty 500 advancing 1.4% in the first week. This broad-based rally sets a stable foundation for 2025. While market valuations appear stretched, especially in mid- and small-cap segments, history suggests such conditions can persist longer than expected. Investors should prioritize businesses with steady earnings growth and adaptability to changing trends.”

Looking ahead, the upcoming Q3 results season is expected to play a crucial role in determining market direction. Following this, attention will likely shift toward the Union Budget and policy decisions under the Trump 2.0 administration.

Currently, the Sensex is nearly 6,000 points shy of its all-time high of 85,978.

In terms of annual performance, the Sensex and Nifty delivered gains of 9-10% in 2024, following a stellar 16-17% rise in 2023. However, 2022 saw only modest gains of 3% amid challenges like weak GDP growth, foreign fund outflows, rising food prices, and sluggish consumption, which continued to weigh on investor sentiment through 2024.

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