Indian Stock Market Rises on Budget Hopes, IT Stocks Drag

MUMBAI, India — India’s benchmark stock indexes advanced on Thursday, driven by gains in state-owned companies ahead of the government’s budget announcement, despite a drop in IT stocks and Tata Motors. The Nifty 50 rose 0.37% to 23,249.5, while the BSE Sensex climbed 0.3% to 76,759.81, marking their third consecutive session of gains.

However, the Nifty remains 11.5% below its record high from September 27, as economic and corporate earnings growth have moderated. Analysts attribute the recent rally to attractive valuations in large-cap stocks following a recent correction. “Large-cap stocks offer a good margin of safety from a long-term perspective,” said Gaurav Bhandari, CEO of Monarch Networth Capital.

Nine of the 13 major sectors advanced on Thursday, with state-owned companies gaining about 2%. Analysts expect the government to prioritize public spending and infrastructure in its budget announcement on Saturday. Reliance Industries, the second-heaviest stock on the benchmarks, rose 1.4%.

In contrast, small-cap and mid-cap stocks, which are more domestically focused, closed flat. These segments have underperformed the Nifty 50 in January, losing 12% and 8%, respectively. “Elevated valuations and earnings concerns in small and mid-caps could trigger further selling pressure,” said Nitin Bhasin, head of institutional equities at Ambit Capital.

The IT index fell 1.1%, reversing gains from the previous session. Tata Motors dropped 7.4% after reporting weak car sales, while Adani Enterprises slid about 3% following its biggest quarterly profit slump in three years. On the positive side, Bajaj Finance rose 2.1% after posting strong quarterly profit growth driven by loan demand.