Indian equity markets closed Monday's session with solid gains, driven by a powerful rally in banking shares and broad optimism surrounding trade discussions. The benchmark Nifty 50 index advanced 173.60 points, or 0.7%, to settle at 25,867.30. The Sensex climbed 485.35 points, or 0.6%, finishing at 84,065.
Banking Giant Leads Advance
State Bank of India shares soared 7.5% to a record closing high of 1,146 rupees, providing the single largest boost to the indices. The surge followed the lender's December-quarter results, which exceeded profit forecasts. The bank also raised its full-year loan growth guidance to 13%-15%, prompting several analyst upgrades. "SBI delivered another strong performance, demonstrating earnings resilience," noted a report from Elara Securities.
Broad-Based Strength
Market breadth was decisively positive, with 3,105 stocks advancing on the BSE compared to 1,257 decliners. Mid- and small-cap shares notably outperformed the major indexes. Analysts interpreted this as a sign of broadening risk appetite among investors, partly fueled by optimism over a potential interim trade framework between India and the United States. Sectors linked to exports, such as textiles and seafood, saw particular interest.
The metals sector also contributed to the gains, with the Nifty Metal index rising nearly 2%. Shares of Hindustan Copper performed well, while Force Motors hit a 52-week high after announcing plans to acquire the remaining stake in Veera Tanneries for 175 crore rupees.
Currency and Bonds Under Pressure
Despite the equity rally, the Indian rupee weakened to 90.7575 per U.S. dollar, pressured by corporate demand for the greenback. In the debt market, India's benchmark 10-year government bond yield rose past 6.75% amid persistent concerns over heavy state borrowing.
Looking Ahead
Investor focus now shifts to key inflation data. India's revamped Consumer Price Index reading for January is due on February 12, with a Reuters poll forecasting headline inflation of 2.4%. "Both food and core inflation are likely to edge higher," said Anubhuti Sahay of Standard Chartered. The subsequent release of U.S. CPI data on February 13 is also anticipated for its potential impact on global rate expectations and emerging market flows.
Traders will monitor whether the banking sector can maintain its momentum ahead of the inflation print and watch for further developments on the trade front for substantive details.
