Markets Climb in Early Indian equity markets opened on a strong note on Monday, driven by robust global cues and easing retail inflation back home. The early gains were supported by improved investor sentiment in the Asian markets, which saw a rally amid optimism surrounding economic growth prospects and a rebound in technology stocks.
Easing inflation data, released by the government last week, further bolstered market confidence, creating expectations that the Reserve Bank of India (RBI) may hold off on further interest rate hikes in the near term. The bullish sentiment was evident across key indices, Markets Climb in Early with both the Sensex and Nifty 50 gaining in early trade.
This article provides an in-depth analysis of market performance, the factors driving the rally, sectoral insights, expert opinions, and implications for investors.
Key Highlights from Early Trade
Sensex and Nifty See Early Gains
- The BSE Sensex climbed over 500 points in early trade to hover around the 66,000-mark, led by gains in large-cap stocks such as Reliance Industries, HDFC Bank, and Infosys.
- The broader NSE Nifty 50 index gained more than 150 points, surpassing the 19,800-mark, fueled by strength in banking, IT, and FMCG stocks.
- Mid-cap and small-cap indices also traded higher, reflecting strong retail participation and overall market optimism.
Market Breadth Turns Positive
The market breadth indicated broad-based buying, with the advance-decline ratio firmly in favor of advancing stocks. As many as 1,900 stocks were trading in the green on the BSE compared to fewer than 600 in the red, indicating widespread positive sentiment. 
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Factors Driving Market Gains
1. Positive Global Cues
The rally in Asian markets set the tone for Indian equities in early trade. Major Asian indices such as Japan’s Nikkei 225, Hong Kong’s Hang Seng, and China’s Shanghai Composite posted gains amid improved sentiment over regional growth prospects and economic data.
- The tech-heavy NASDAQ rally in the U.S. last week provided additional support, Markets Climb in Early boosting sentiment for Indian IT and technology shares.
- The stabilization of bond yields globally has also alleviated concerns over a sharp economic slowdown, prompting risk-on sentiment in equity markets.
2. Easing Retail Inflation in India
India’s latest Consumer Price Index (CPI) data revealed a dip in retail inflation to 4.95% in December 2024, down from 5.38% in November, and comfortably within the RBI’s target range of 2-6%. Key highlights from the inflation data include:
- Food Inflation Falls: Vegetable prices, which had spiked earlier in 2024, saw a decline, Markets Climb in Early helping bring down overall food inflation.
- Stable Core Inflation: Core inflation, which excludes volatile food and fuel prices, remained stable, easing concerns over broader price pressures.
Market participants welcomed the inflation data, with expectations growing that the RBI may maintain a pause on interest rate hikes, thus sustaining liquidity and credit flow in the economy.
3. Strong Institutional Buying
The markets received a boost from foreign institutional investors (FIIs), who have been consistent net buyers in recent sessions. Data from the National Securities Depository Limited (NSDL) showed net inflows of approximately ₹2,000 crore last week, marking a reversal from earlier outflows.
Domestic institutional investors (DIIs), including mutual funds, have also provided strong support, Markets Climb in Early capitalizing on value opportunities in mid-cap and small-cap stocks.
4. Corporate Earnings Expectations
Optimism surrounding the ongoing Q3 corporate earnings season added to the market’s strength. Investors are anticipating better-than-expected results from key sectors such as IT, Markets Climb in Early banking, and FMCG. The earnings season is expected to highlight the resilience of Indian companies in navigating global macroeconomic uncertainties.
Sectoral Performance: Leaders and Laggards
Gainers
- Banking and Financials
The banking and financial services sector continued to outperform, Markets Climb in Early driven by strong credit growth, robust margins, and improved asset quality. Key gainers included:- HDFC Bank: Up by 2% in early trade on expectations of strong quarterly results.
- ICICI Bank and Axis Bank also gained, supported by improved lending activity.
- IT Sector
IT stocks saw a bounce-back following a rally in U.S. technology stocks.- Infosys and TCS led the gains, with market participants optimistic about their Q3 earnings.
- Wipro and HCL Tech were also trading higher, Markets Climb in Early bolstered by easing recession fears in global markets.
- FMCG
FMCG stocks saw fresh buying interest amid easing inflation, which is expected to improve consumer demand.- Leaders such as Hindustan Unilever and ITC gained over 1.5%.
- Lower input costs are likely to support margin recovery for FMCG companies, Markets Climb in Early further boosting their appeal.
- Energy and Oil & Gas
Stocks like Reliance Industries and ONGC performed well, Markets Climb in Early supported by stabilization in crude oil prices and rising refining margins.
Laggards
While most sectors saw gains, a few sectors lagged behind:
- Pharmaceuticals: Pharma stocks were largely flat, with muted performance from Sun Pharma and Dr. Reddy’s Laboratories.
- Metals: After last week’s rally, profit-booking was seen in select metal counters like Tata Steel and JSW Steel.
Expert Insights: What Do Analysts Say?
Bullish Momentum
Market experts noted that the combination of global optimism and easing inflation has provided a solid foundation for bullish momentum.
- Nagaraj Shetty, Technical Analyst at HDFC Securities, said:
“With the inflation numbers easing and FIIs returning to the markets, the Nifty 50 may aim to challenge the 19,900 resistance level. Investors should focus on sectors like IT and banking for better returns.”
Temporary Relief or Sustainable Rally?
Some analysts remain cautiously optimistic, warning that global macroeconomic risks could resurface.
- Siddhartha Khemka, Head of Retail Research at Motilal Oswal, commented:
“The easing retail inflation is certainly a relief, but the market will watch closely for central bank actions globally. Sustaining today’s rally will depend on the continued strength of FII flows and corporate earnings over the coming weeks.”
Global Impact on Indian Markets
Asian Market Rally
Asian markets provided strong cues to Indian equities, Markets Climb in Early supported by factors such as China’s reopening after strict COVID-19 restrictions and optimism over better economic prospects in 2025.
- Nikkei 225 was up 1.2% in early trade.
- Hang Seng rose by over 2%, led by tech stocks like Alibaba and Tencent.
Impact of U.S. Markets
Wall Street’s robust performance, particularly in tech-heavy indices, offered strong tailwinds for Indian IT and technology shares. The Nasdaq gained 1.6% on Friday, reflecting easing recession concerns in the U.S. amid a favorable labor market report.
Retail Investors’ Participation Grows
Retail participation in Indian equity markets continues to expand, with investors focusing on long-term wealth creation through SIPs (Systematic Investment Plans). According to data, mutual fund inflows remain steady, crossing ₹12,000 crore in December 2024. Retail investors are likely to remain active players, Markets Climb in Early especially in the mid-cap and small-cap segments. 
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Short-Term Outlook for Indian Markets
The overall sentiment for Indian equity markets remains positive, Markets Climb in Early with expectations of strong earnings growth and resilient domestic demand acting as key pillars. However, short-term risks persist, including:
- Global Central Bank Decisions: Investors will closely monitor U.S. Federal Reserve and RBI policy stances regarding interest rates.
- Crude Oil Prices: Volatility in crude prices could impact energy and related sectors.
- Geopolitical Tensions: Ongoing global conflicts or unexpected escalations could dent risk sentiment.
Conclusion: A Promising Start to the Week
The strong start to Monday’s trading session reflects the confluence of positive global cues, easing retail inflation, and improving economic fundamentals in India. While sectors such as banking, IT, Markets Climb in Early and FMCG continue to lead the rally, broader participation across mid-cap and small-cap stocks indicates strong investor confidence.
For market participants, the easing inflation data and early-year optimism provide a timely reminder of India’s growth story. However, vigilance is key, Markets Climb in Early as global uncertainties and macroeconomic shifts could still impact sentiment in the coming weeks. Investors are advised to focus on fundamentally strong stocks and maintain a balanced approach to their portfolios, leveraging the momentum while remaining mindful of potential risks ahead. ALSO READ:-Boeing CEO Visits India on First Overseas Trip: A Strengthened Partnership with India’s Aerospace Sector 2025