Markets in a 9-days rally, longest since Oct 2020; IT stocks nosedive, Infosys top loser ahead of Q4

Sun Pharma Q2 Results

Even though Indian markets rose for the ninth straight day on Thursday, the advance was curtailed by a severe selloff in IT companies following significant Q4 earnings. Strong purchasing in the banking and auto sectors would be what freed the Sensex and Nifty 50 from the bears’ hold. Also, optimism for a further RBI repo rate delay following a decrease in domestic CPI soothed feelings. But, cautious betting was prompted by FOMC minutes that suggested a “moderate recession.” The volatility index for India decreased by around 3%.

The nine-day winning streak for Indian stocks is the longest since October 2020.

The final value of the Sensex was 60,431, up 38.23 points or 0.06%. Nifty 50 finished the day up 15.60 points, or 0.09%, at 17,828.

On the BSE, the IT index fell approximately 592 points or 2.05% in terms of sectoral indexes. Capital Goods dropped over 204 points after that.

As TCS released mixed financial results for the fourth quarter of FY23 and failed street expectations, IT stocks are under pressure. The next company to release its Q4 results on Thursday after market hours is Infosys.

BSE Bankex soared over 650 points or 1.4%, which is one of the positives. Around 575 points, or 1.4%, were added to the Bank Nifty. Moreover, auto stocks saw gap-up gains.

Gainers on the Sensex were IndusInd Bank, up 3.2%, Power Grid, up 1.7%, Axis Bank, up 1.6%, and Bajaj Finserv, up 1.5%. Both ICICI Bank and Kotak Bank saw gains of more than 1%.

On the Sensex, Infosys fell by about 2.8%, Tech Mahindra fell by 2.13%, HCL Tech fell by 1.62%, TCS fell by 1.6%, and L&T fell by 1.31%.

Vinod Nair, Head of Research at Geojit Financial Services, commented on the market’s performance: “Indian shares experienced a downturn, weighed down by IT stocks following weak quarterly earnings and a cautious outlook from the top IT firm, which flagged concerns over deferred spending and uncertainty in its BFSI segment.”

Said Nair “The MPC’s decision to leave policy rates on hold is supported by the decline in India’s CPI inflation to 5.66% and the moderation of core inflation. When US inflation fell to 5.0%, concerns spread around the world as the FOMC minutes suggested that the impact of the banking crisis would lead to a “mild recession.””

The rupee increased to its psychologically important level of 81.85 against the US dollar on the interbank foreign exchange market as a sharper than anticipated decline in US inflation statistics impacted sentiment towards the currency. Investors are anticipating a swift halt to the Fed’s run of rate increases. After increasing for three straight weeks, the rupee’s performance this week barely changed.

Jateen Trivedi, VP Research Analyst at LKP Securities, commented on the rupee as follows: “The CPI in the US came in at 5.0%, which was below expectations, and the CPI in India came in at 5.66%, which was also below expectations, helping the rupee on the whole because the interest rate cycle hike will be perceived as having dovish points according to a data-specific approach. The future range of the rupee is between 81.50 and 82.10.”

Next, Rupak De, a Senior Technical Analyst at LKP Securities, commented on the Nifty 50: “Since Nifty completed the session roughly 100 points off the day’s low, the battle between bulls and bears was won by the bulls. For the ninth trading session in a row, the benchmark Nifty has achieved a winning streak. The important moving averages are well below the index value at this time. As long as it is over 17,700, the trend is likely to stay in the affirmative. The resistance level of 18000 will probably be significant on the higher end.”

Due to Dr. Baba Saheb Ambedkar Jayanti, markets will be closed on Friday.

Next week, trading will start again.

Disclaimer: Currency Veda does not endorse the opinions or suggestions expressed above by specific analysts or brokerage firms. Before making any financial decisions, we suggest investors to consult with licenced professionals.