Indian stock indices rose in the first trading session of 2025. This is the seventh consecutive year that the indices closed with gains in the first trading session. During the day, the Sensex rose as much as 617 points but ended the session with a gain of 368 points or 0.5 per cent at 78,507. On the other hand, the Nifty closed at 23,743, up 98 points or 0.4 per cent. The gains in the market were broad-based as the Nifty Midcap 100 gained 0.4 per cent and the Nifty Smallcap added 1.02 per cent.

HDFC Bank was the biggest gainer in the Sensex on Wednesday, rising 0.6 per cent. Larsen & Toubro rose 1.6 per cent and Mahindra & Mahindra added 2.5 per cent and contributed significantly to the Sensex gain. Although the benchmark indices ended 2024 with a gain of over 8 per cent, the second half of the year saw turmoil that wiped out the gains recorded in the first nine months.

Benchmark indices had gained as much as 20 per cent year-on-year in September. However, sharp selling by foreign portfolio investors (FPIs) due to stimulus measures in China and then disappointing earnings weighed on morale.

Markets are expected to remain sluggish in early 2025 as markets face expensive valuations, structural issues in domestic consumption demand, uncertain policy measures from the incoming US administration, and elevated geopolitical tensions.

Kotak Institutional Equities said, we observe three headwinds for the Indian market, which include expensive valuations in the near term across all market-cap companies and sectors except financials while core market valuations have declined, earnings contraction and sluggish consumption demand.

The note said that the policies of the incoming US administration and growing geopolitical conflicts will have an impact on the global economy and markets. The note said, India is more secure from both these issues, but global morale will also matter for India. In the coming time, the results of companies for the quarter ending in December and the Union Budget next month will determine the direction of the market.

Motilal Oswal Financial Services Research Head Siddharth Khemka said, "We expect the market to remain calm till the third quarter results announcements start and we will see stock and sector-specific action here. Investors will keep an eye on the December manufacturing PMIs of India and the US."

The market's rising to falling ratio was strong with 2,718 stocks advancing while 1,267 declined. More than two-thirds of Sensex stocks closed with gains. The total market capitalisation of BSE-listed companies rose by Rs 2.5 lakh crore to Rs 444.4 lakh crore.

Foreign portfolio investors (FPIs) were net sellers of Rs 1,783 crore while domestic institutional investors bought shares worth Rs 1,690 crore. Foreign investors were net sellers of Rs 3,981 crore in 2024 while domestic institutions bought shares worth Rs 5.3 lakh crore.

Ajit Mishra, Assistant Vice President (Research), Religare Broking, said, "The index has entered the second week of consolidation and current indicators suggest that this trend is likely to continue. We are advocating a stock specific strategy, focusing on stocks that are exhibiting relatively strong momentum."