Stock markets ended higher on Thursday, extending gains for a third straight session. The rebound came after positive comments in the government’s Economic Survey lifted investor mood ahead of the Union Budget.
However, gains were limited as the rupee slipped to another record low during the session.
The Nifty 50 closed 0.3% higher at 25,418.90, while the BSE Sensex rose 0.27% to end at 82,566.37. Both indices recovered after falling around 0.8% earlier in the day, as buying returned in heavyweight stocks.
The broader market showed mild gains. The small-cap index rose 0.2%, while the mid-cap index also ended 0.2% higher.
ECONOMIC SURVEY SUPPORTS SENTIMENT
Investor sentiment improved after the Economic Survey projected India’s economy to grow between 6.8% and 7.2% in the financial year starting April. The growth is expected to be driven by strong domestic demand.
While this forecast points to a slowdown from the current year’s projected growth of 7.4%, Finance Minister Nirmala Sitharaman said the outlook “is one of steady growth amid global uncertainty, requiring caution, but not pessimism.”
The comments helped markets recover from early losses, especially in key sectors.
SECTORAL PERFORMANCE REMAINS MIXED
Financial stocks led the recovery. The financial services index, which was in the red earlier in the session, closed 0.6% higher. Private bank stocks gained 1%, helping both benchmark indices turn positive by the close.
However, gains were capped by weakness in information technology stocks. The IT index fell 0.8% after the US Federal Reserve kept interest rates unchanged, in line with expectations.
Higher US interest rates often reduce the appeal of emerging markets like India for foreign investors, as they support the US dollar and US Treasury yields.
FOREIGN SELLING AND RUPEE WEIGH ON MOOD
Foreign portfolio investors have continued to sell Indian equities. They have sold shares worth USD 4.56 billion so far in January, following record outflows of USD 19 billion in 2025.
The continued selling, along with the falling rupee, kept overall market sentiment cautious.
Ajit Mishra, SVP, Research, Religare Broking Ltd, said that market sentiment stayed cautious as investors awaited key domestic events, including the Economic Survey and the upcoming Union Budget.
“Global uncertainty, mixed corporate earnings and continued foreign institutional selling weighed on risk appetite, while weakness in the Indian rupee added to the cautious undertone. That said, resilience in select heavyweight stocks helped limit the downside and enabled the index to sustain its recovery,” he added.
Mishra further said that the Nifty continues to hover around the long-term moving average, the 200 DEMA, with the ongoing tussle reflecting indecision at these levels.
“Having crossed the immediate hurdle around 25,350, the index now appears poised to inch towards the 25,600 zone. Strength in the banking index is playing a key role in the rebound, with other sectors providing support on a rotational basis. However, participants should avoid getting carried away by the recovery and remain selective, focusing on performing sectors and themes while keeping position sizes in check amid lingering geopolitical uncertainty and the approaching Union Budget,” he added.
With the Union Budget due soon, investors are expected to remain cautious in the near term. While support from banking and other heavyweight stocks has helped markets stabilise, concerns around foreign selling, global interest rates and currency weakness are likely to keep volatility high in the coming sessions.
