Indian Stock Market Faces Profit-Taking Amid US Dollar Strength, Sensex Drops 0.90%

India’s stock market experienced a sharp reversal on Friday, January 3, following a strong rally the previous day. After posting a nearly 2% gain on Thursday, the Sensex and Nifty 50 indices were hit by profit-taking, driven in part by a strengthening US dollar.

The Sensex opened the day at 80,072.99, higher than its previous close of 79,943.71, but quickly lost ground, dipping 834 points to hit an intraday low of 79,109.73. Despite a partial recovery, the 30-stock index ended the session down by 721 points, or 0.90%, at 79,223.11.

A Broad-Based Rally Signals Optimism for 2025

Krishna Appala, Senior Research Analyst at Capitalmind Research, noted that the start of 2025 has been positive, with the Nifty gaining 1.25% and the Nifty 500 advancing by 1.4% in the first week of the year. He described this broad-based rally as a positive indicator for the market, signaling stability and optimism for the year ahead. However, he cautioned that while market valuations appear stretched, especially in the mid- and small-cap segments, historical trends show that such conditions can persist longer than expected. Investors should focus on companies with consistent earnings growth and adaptability to changing market dynamics.

Sectoral Losses: Banking, IT, and Pharma Hit Hard

Most sectoral indices saw significant losses, with the banking, financial, IT, and pharmaceutical sectors suffering the most. The Nifty Bank index dropped by 1.20%, while the Financial Services index fell by 1.13%. The Private Bank index lost 0.90%, although the PSU Bank index posted a modest gain of 0.31%.

In the IT sector, the Nifty IT index saw a decline of 1.41%, while the Pharma index fell by 1.23%. The Healthcare index also lost ground, dropping 1.16%, with all three sectors shedding over a percentage point.

Top Stock Performers: ITI, Apollo Micro Systems Lead the Way

Despite the overall market downturn, certain stocks saw impressive gains. The top five performing stocks for the week ending January 3 were:

  1. Apollo Micro Systems: ₹138.30 (Up 40.69% from ₹98.30)
  2. ITI: ₹457.25 (Up 39.77% from ₹327.15)
  3. Avonmore Capital: ₹23.46 (Up 39.64% from ₹16.80)
  4. Lloyds Metals and Energy: ₹1,439.15 (Up 21.84% from ₹1,181.15)
  5. GMR Power and Urban: ₹129.85 (Up 18.31% from ₹109.75)

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