 "Sensex soars 850 pts, Nifty vaults 250 pts: What's behind Friday's rally?")
Indian benchmark equity indices rallied over 1 per cent in trades on Friday on the back of frenzied buying in IT shares, a day after Infosys and TCS announced their Q3 performance. Shares of PSU banks too perked up in the latter half of the day.
The S&P BSE Sensex scaled a fresh life-time high at 72,721, and finally ended with a gain of 847 points at 72,568. The NSE Nifty 50 registered a new summit at 21,928, before signing-off the day with a solid 247-point at 21,895.
Since the start of the calendar year, the markets have been trading a volatile note, with certain sector of market participants turn skeptic on valuation concerns given the sharp rally from the October lows. Also, rising geopolitical concerns and upcoming general elections in India have kept investors sentiment in check.
However, here's what driving Fridays' rally:
IT stocks: Markets broadly believed that IT sector would report subdued earnings for the December quarter. While, Infosys and TCS did report subdued numbers, with the former even lowering its growth guidance for the third straight quarter. The silver lining was the total contract value (TCV) signed, which continued to show a healthy momentum.
For TCS the TCV for Q3 came in at $8.1 billion, up 3.8 per cent from $7.8 billion it signed in the Q3 of FY23. Infosys’ TCV of $3.2 billion was down from $3.3 billion in the same period last year. Read More
This has prompted brokerages to remain optimistic on the future growth prospects. That apart, the Infy ADR on the NYSE had rallied 5 per cent post results, which were announced after market hours on Thursday in India.
Also Read
As a result this morning, Infosys opened with a gap of 4 per cent at Rs 1,556, and went on build gains as the day progressed. The stock so far has touched a high of Rs 1,613 (up 8 per cent) and is within striking distance of its 52-week high at Rs 1,620.
TCS too started trade gap-up at Rs 3,844, and has touched a high of Rs 3,894 so far in the day. The stock quotes 4 per cent higher at Rs 3,883.
The buying soon spread across the IT sector, with the likes of Wipro and HCL Technologies also up 4 per cent and 3 per cent, respectively, ahead of Q3 results today. The BSE IT index was up almost 5 per cent at 37,063.
DIIs lend support: After selling shares worth Rs 7,300 crore in the first week of the New Year, the Domestic Institutional Investors turned net buyers this week, and have net purchased stocks to the tune of Rs 3,950 crore so far in the four trading sessions this week.
Technical: Amid the current volatile phase, the Nifty 50 repeatedly tested support around its 20-DMA (Daily Moving Average) which it eventually managed to sustain. Presently, the 20-DMA stands at 21,550. The NSE benchmark is now seen climbing towards the higher-end of the Bollinger Bands on the daily chart at 21,900 levels.
Indian Rupee: The Rupee has been steady around the 83-mark in recent trading sessions. The resilience shown of the Indian Rupee against the US dollar will help attract FII flows to India.