At 10.17 AM, the Sensex climbed over 1,000 points to 73,782, while the Nifty gained nearly 300 points to trade above the 22,900 level.
Top gainers on the Sensex included TCS, Tech Mahindra, Infosys, Bharti Airtel, ICICI Bank, Axis Bank, and ITC. On the other hand, BEL, Adani Ports, Trent, Power Grid Corp, SBI, L&T, and NTPC were the major laggards.
The sharp divergence highlighted weakness in the broader market, with smallcap and microcap indices falling by up to 0.8%. In the Nifty Smallcap 250 index, MTAR Technologies, Netweb Technologies and CEAT were among the stocks that plunged up to 5%. The midcap segment, however, showed resilience, with its index gaining 0.3%.
Here are the major factors behind the surge:
1) IT stocks extend gains
TCS, Infosys, HCL Tech, Tech Mahindra, among others rallied for a third straight session on the back of improved earnings and a selloff in AI-linked stocks. Asian markets opened lower on Thursday after US consumer inflation rose faster than expected, strengthening expectations that the Federal Reserve could take action later this year and weighing on global equities.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.2%, led by a 5.6% slump in South Korea’s KOSPI. Japan’s Nikkei 225 declined 1.3%, while S&P 500 e-mini futures slipped 0.3%.
Overnight, Wall Street ended lower on Wednesday, with losses in artificial intelligence stocks weighing on the broader market as investors digested hotter-than-expected US consumer inflation data for September.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments said that from the Indian market perspective, the correction in AI stocks is positive. “FIIs who have been selling Indian stocks and buying AI stocks will halt this trend and under favourable conditions might even reverse it. Indications that the finance ministry might reconsider the taxation of LTCGs in the coming Budget, have the potential to keep the market resilient,” he added.
The strength in the IT stocks following the results of HCLT and the optimism surrounding that will hold the IT index strong. The expected good Q2 results from financials can impart resilience to the market.”
2) Oil retreats
Oil prices fell by more than $1 on Thursday as investors assessed the risk of supply disruptions from attacks on shipping in the Strait of Hormuz against US efforts to lower petroleum transport costs by easing sanctions on vessels.
Brent crude futures declined $1.76, or 1.75%, to $104 a barrel, while US West Texas Intermediate (WTI) crude futures dropped $1.02, or 1.07%, to $94.07. Both benchmarks reversed gains made in the previous session.
3) Rupee strength
The Indian rupee opened 0.2% higher at 94.92 against the US dollar, compared with its previous close of 95.15. The dollar slipped after scaling an 18-month peak overnight.
Manoj Kumar Jain of Prithvi Finmart said the dollar is showing bearish momentum, with the MACD indicating a negative crossover, although the pair is in oversold territory. Immediate support is placed at 95.05-94.80, while resistance is seen at 95.4500-95.80. The pair is trading below the 96.22 support level and is expected to move within the 94.70-96.45 range this week. Fresh long positions are best avoided until markets show greater stability.
4) Sensex weekly expiry
October 15 marks the weekly expiry for the Sensex. The market can swing sharply on expiry day as traders square off or roll over futures and options positions. Short covering can push the index higher, while fresh selling and long unwinding can drag it lower.
Technical set up
“The challenge that diffused the upside attempt and the support that eased the subsequent dips are within the expected construct that aims for 23,200-23,600. That said, 22,550-22,787/88 band will be the one to beat for directional confirmation. Inability to float above 22,550 will expose 22,070,” Anand James, Chief Market Strategist, at Geojit said.
Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
