Benchmark indices opened on a subdued note on Tuesday but soon turned higher, supported by a rally in IT stocks, lower crude oil prices and a stronger rupee. Investors also remained optimistic amid improving quarterly earnings and easing concerns over global inflation after the recent decline in oil prices.
The BSE Sensex was up 145.31 points, or 0.19%, at 76,981.09 in early trade, while the NSE Nifty50 gained 23.95 points, or 0.10%, to 24,019.90, holding above the key 24,000 mark as of 9:25 am.
IT STOCKS POWER THE RALLY
Technology stocks emerged as the biggest drivers of the market’s gains.
The Nifty IT index surged 2.69%, making it the top-performing sector in early trade, while Nifty MidSmall IT & Telecom climbed 1.69%.
Among the Sensex constituents, TCS led the rally with a gain of 3.23%, followed by Tech Mahindra (2.78%), Infosys (2.58%) and HCLTech (1.77%). Eternal added 0.88%, while Hindustan Unilever, Larsen & Toubro, Titan, Cement and InterGlobe Aviation (IndiGo) also traded in positive territory.
However, gains were capped by weakness in a few heavyweight stocks. BEL was the biggest loser, falling 2.73%, followed by NTPC (-0.71%), Power Grid (-0.66%), Reliance Industries (-0.32%), Bharti Airtel (-0.30%), Trent (-0.30%), SBI (-0.29%) and Adani Ports (-0.23%).
REALTY, FMCG IN GREEN; BANKS LAG
Apart from IT, buying was visible in a few domestic-focused sectors.
The Nifty Realty index rose 0.52%, followed by FMCG (0.45%) and Media (0.20%). Healthcare and Pharma also traded marginally higher.
On the other hand, PSU Bank stocks declined 0.26%, while Auto fell 0.20%, Metal slipped 0.18% and Oil & Gas eased 0.14%, reflecting a mixed trend across sectors.
BROADER MARKETS MIXED
The broader market witnessed a mixed performance.
The Nifty Midcap 50 gained 0.08%, while the Nifty 100, Nifty 200 and Nifty 500 traded marginally in the green. However, the Nifty Midcap 100, Nifty Smallcap 100 and Nifty MidSmall Financial Services indices edged lower.
India VIX, the market’s fear gauge, rose marginally by 0.21% to 12.69, indicating that volatility remained largely contained.
LOWER CRUDE, FIRMER RUPEE SUPPORT SENTIMENT
Crude oil prices extended their decline after Monday’s sharp fall. Brent crude slipped another 1.38% to $87.14 a barrel, while WTI crude fell 1.38% to $81.47.
Lower crude prices are viewed as a positive for India, which imports nearly 85% of its crude oil requirements, as they help ease inflationary pressures and reduce the country’s import bill.
The rupee also opened stronger, appreciating 0.16% to 95.76 against the US dollar compared with its previous close of 95.91, further supporting investor sentiment.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, believes several domestic and global factors could keep the market on a positive trajectory, although intermittent bouts of profit booking cannot be ruled out.
“There are many positive factors that have the potential to sustain the mild rally in the market. The rally is unlikely to be consistent and steady. There will be occasional profit booking and corrections.”
The positives for the market are: One, the sharp correction in Brent crude to $87 is a strong fundamental and sentiment positive for the market. Two, the progress of the monsoon in July is good and this has brought down the monsoon rainfall deficit to 15.4%.
Three, the Q1 results declared, so far, indicate earnings revival and this has the potential to sustain in the coming quarters. Fourth, credit growth in the economy is impressive, running at around 18%, and there is good volume growth in sectors like automobiles.
On the external front, the weakening of the chip trade globally is a positive for India,” he said.
Investors will now closely monitor quarterly earnings announcements, global crude oil prices and this week’s monetary policy meetings of the US Federal Reserve, Bank of England and Bank of Japan for further cues.
