The Indian stock market traded on a firm note on Wednesday, with both the Sensex and the Nifty gaining after a sharp decline in the previous session.
At 10:38 am, the Sensex was up over 500 points near the 76,750 mark, while the Nifty 50 jumped over 100 points to trade above the 23,900 level. This came as India VIX, which measures volatility in the market, fell nearly 2% to 13.72.
Trent shares jumped more than 4% to lead gains on the Sensex. Tech Mahindra, Infosys and ICICI Bank shares followed, rising up to 2%. Bharti Airtel and HCL Tech shares, meanwhile, declined nearly 1% each to lead losses.
Broader markets slipped into the red, with the Nifty Smallcap 100 and Nifty Midcap 100 indices falling marginally. Sectorally, Nifty Pharma and Nifty IT gained around 0.5% each to lead gains, while Nifty Metal fell nearly 0.6%. Around 1,582 stocks advanced on the NSE, while 815 declined and 98 remained unchanged.
What lies ahead?
Global stock markets turned weak yesterday, triggered by a crash in semiconductor stocks, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. South Korea’s Kospi was down 10%, and this spread concerns to other markets too. The Nikkei and Nasdaq corrected by 3% and 2.2%, respectively. India was not much impacted; the Nifty declined by 1.16% only, the analyst highlighted.
“In morning trade today, Kospi has bounced back, pushed up by Samsung. Excessive volatility will continue in semiconductor stocks and markets like South Korea and Taiwan. Sharp rallies will trigger profit booking; sharp corrections will encourage buying. The profitability of these companies will continue to be excellent. However, concentration risks are high. This means high volatility will continue,” he added.
This excessive volatility is favourable for India, which is growing at a steady pace, according to Vijayakumar, who added that the crash in Brent crude to below $77 has removed the macro headwinds for India. The rupee has stabilised. FII selling appears to have tapered off. This is positive for the market, he said.
“But the new concern is the poor monsoon, which is deficient by 43% so far. There are concerns that this might impact India’s growth and corporate profits too, marginally. Investors can align their portfolios to adjust to this emerging threat. Sectors like FMCG and entry-level two-wheelers are likely to be impacted by a decline in rural income. Pharmaceuticals with inelastic demand will be resilient and may even outperform during a monsoon-deficient situation,” he added.
Technical view on Nifty
Technically, the undertone remains cautious as long as the Nifty trades below 23,950, said Rajesh Palviya, Head of Research at Axis Direct. He highlighted that a sustained move above this level could trigger a relief rally towards 24,100–24,150, while immediate support is placed at 23,780.
“A decisive breach below this support may accelerate profit booking towards the 23,600 zone. Although oversold conditions after the expiry session could support a near-term pullback, investors should remain watchful of global technology stocks, which are likely to continue dictating market sentiment in the near term,” he added.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
