Markets cheer the new year; Sensex gains 327 points, Nifty ends at 18,197

Indian indices logged gains on the first trading day of 2023, riding on a combination of buying in index majors, steady European markets, and a boost in sentiment after the release of macro data.

Both the indices clocked near 0.5 per cent gains with the Sensex rising 327 points to end the session at 61,168, while the Nifty ended at 18,197, a gain of 92 points. Since 2019, both the indices have ended with gains in the first session of each year. Usually, stocks rise during the last five and first two sessions of a year.

The data for goods and services tax (GST) collection released during the weekend, shows that December collection rose to over Rs 1.49 trillion, a surge of 15 per cent year-on-year. It was also the third-highest monthly collection since the tax was introduced. GST revenue has been over Rs 1.4 trillion in the last ten months. Meanwhile, India's manufacturing index rose to the highest in more than two years. The manufacturing Purchasing Managers' Index (PMI) rose to 57.8 in December from 55.7 in the previous month. A reading above 50 indicates expansion. 

"The PMI was good, which means the economy is strong, and there are no expectations of weakening in the near term. The market started on a nice note due to the economic data and the European markets. We are in line with what is happening globally," said Andrew Holland, chief executive officer of Avendus Capital Alternate Strategies.

The gains in index heavyweights like Reliance Industries (RIL) and ICICI Bank also helped lift the indices. RIL rose 1.06 per cent and contributed the most to the Sensex, followed by ICICI bank, which rose 1.3 per cent. Optimism around easing US inflation further boosted sentiment.

Though the Indian benchmarks made modest gains in 2022, the year was marked by heightened volatility amid the Russia-Ukraine war, rate hikes, and recession fears. A lockdown in China and a spike in commodity prices led to investors dumping risky assets.

 "Going forward, we expect the market to remain steady with a positive bias. This should drive sector-specific action in the market. Some stock-specific action would also be seen in auto sector stocks after it reported decent December sales numbers. Oil producing companies would be the focus as Brent crude prices surged to one-month high,' said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.

The market breadth was also strong, with 2,247 stocks advancing and 1,378 declining. The foreign portfolio investors (FPIs) were net sellers worth Rs 212 crore. Metal stocks gained the most, and its sectoral index on BSE rose 2.8 per cent.