Benchmark stock market indices saw a brief respite on Wednesday, closing higher amid a surge in IT sector stocks, which were boosted by expectations surrounding the release of the key US inflation data. This marked a positive shift in market sentiment, following the recent volatility caused by global economic uncertainties.
The S&P BSE Sensex gained 224.45 points, closing at a level of 76,724.08, while the NSE Nifty50 added 371.5 points, ending at 23,213.20. The broader market saw a shift in investor confidence, with both indices seeing significant upward movement as investors priced in a potential easing of market concerns ahead of upcoming macroeconomic data.
IT stocks were the standout performers on the day. Persistent Systems was the top performer, gaining a robust 3.74% on the Nifty50 IT index, followed by L&T Technology Services, which rose 3.47%. Other IT majors like Tech Mahindra, LTI Mindtree, and HCL Technologies also saw strong gains, reflecting optimism about the sector's performance in light of ongoing global digital transformation. Tech Mahindra added 1.67%, LTI Mindtree gained 1.36%, and HCL Technologies rose 0.67%. Infosys climbed by 0.60%, while Tata Consultancy Services (TCS) showed a modest increase of 0.53%, suggesting a general upward trend in the IT sector. Coforge, another player in the IT services space, edged up by 0.09%, while Mphasis and Wipro bucked the trend, with Mphasis declining 0.08% and Wipro showing a minimal drop of 0.09%.
Vinod Nair, Head of Research at Geojit Financial Services, provided context to the domestic market's ongoing volatility. He cited elevated US bond yields, a strengthening dollar, and increasing foreign institutional investor (FII) outflows as key factors weighing on market sentiment. Furthermore, global markets were seen adopting a cautious stance, particularly ahead of the release of US December CPI inflation data, which is expected to remain elevated in the short term, potentially limiting the Federal Reserve's ability to make aggressive interest rate cuts. Nair also highlighted that a rise in oil prices and the appreciation of the dollar could have adverse effects on domestic inflation in India, posing challenges for the economy.
On the Nifty50, NTPC emerged as a strong performer, surging 4.01%, driven by positive sentiment in the power sector. Trent Limited, which has seen increased interest from investors in recent times, rose 3.86%. The Power Grid Corporation showed robust momentum, climbing 2.88%, while Kotak Mahindra Bank advanced 2.14% in response to positive market sentiment around financial stocks. Maruti Suzuki India, a bellwether in the Indian auto sector, rounded out the top gainers with a solid 1.91% increase.
On the flip side, several stocks faced declines. Mahindra & Mahindra experienced the steepest fall of 2.90%, reflecting concerns over the auto sector's short-term outlook. Axis Bank dropped 2.53%, likely driven by investor caution in the financial space. Bajaj Finserv and Bajaj Finance, both part of the financial services sector, declined 2.26% and 2.21%, respectively, as the sector faced some pressure due to broader market dynamics. Shriram Finance completed the list of major losers with a 1.77% decline.
Vaibhav Vidwani, Research Analyst at Bonanza, mentioned that the day’s trading was marked by a mixed performance across sectors. While Pharma and Auto stocks were under pressure, Realty and Infra sectors showed notable resilience, suggesting that some areas of the market remain attractive for long-term investors. Investor optimism was bolstered by the anticipation surrounding the Union Budget, which is expected to bring in policy measures that could support various sectors. Additionally, market participants are looking forward to the upcoming quarterly earnings reports from listed companies, which could provide more clarity on the financial health of firms and potential growth trajectories.
VLA Ambala, Co-Founder of Stock Market Today, noted that the Nifty had formed a Spinning Top candlestick pattern during the latest session, suggesting indecision in the market. This pattern often signals that investors are cautious and waiting for more concrete direction, such as economic data or corporate earnings reports. She projected that the benchmark index could find support at levels of 23,080, 23,010, or 22,970, and expected resistance between 23,350 and 23,410 in the next session, indicating that the market could experience further consolidation before breaking out in either direction.
Overall, while Wednesday’s trading session offered a temporary reprieve from market volatility, investor sentiment remains cautious as they await key economic data and corporate earnings updates that could provide further insight into the health of both the Indian and global economies.
