scorecardresearchMarket Wrap: Sensex, Nifty end flat with positive bias; IT stocks suffer;

Market Wrap: Sensex, Nifty end flat with positive bias; IT stocks suffer; banks, financials shine

Updated: 13 Apr 2023, 04:32 PM IST
TL;DR.

Sensex closed with a mild gain of 38 points, or 0.06 percent, at 60,431 while the Nifty ended at 17,828, up 16 points, or 0.09 percent.

Sensex ended in the green on April 13.

Sensex ended in the green on April 13.

Frontline indices the Sensex and the Nifty ended flat on April 13 as gains in shares of banking and financial heavyweights such as ICICI Bank, HDFC twins and Axis Bank were offset by losses in those of IT majors such as Infosys, TCS, HCL Tech and Tech Mahindra.

IT stocks came under pressure after the industry major TCS posted lower-than-expected numbers for the January-March quarter of the last financial year.

Shares of TCS ended 1.6 percent lower on BSE at 3,189.85 as its Q4FY23 earnings missed the Street expectations.

Apart from the TCS results, the concerns over a recession in the US also weighed on IT stocks. As per the minutes of the Federal Open Market Committee's March 21-22 meeting released on April 12, the US may see a mild recession later this year.

A recession in the US is bad news for the IT sector as it can cause spending cuts by their clients.

Weak global cues were another factor that kept the domestic market lacklustre. US markets closed in the red overnight after the minutes of the FOMC's last policy meeting revealed concern over the looming recession primarily due to the banking crisis.

However, signs of easing inflation in India and the US offered comfort to the market. The US Consumer Price Index (CPI) climbed 0.1 percent in March after rising 0.4 percent in February. This was below market expectations as a Reuters poll of economists had forecast the CPI gaining 0.2 percent in March.

On the other hand, India's CPI inflation, or retail inflation, eased in March to 5.66 percent, coming at the lowest since December 2021.

While inflation is easing and the economy is showing signs of stress, investors await keenly to see if the US Fed takes a pause in its May policy meeting.

However, a 25 bps hike is widely expected in the next meet as the latest data last week showed the labour market remains tight in the US.

Tracking weak global cues, Sensex opened 28 points lower at 60,364.41 and fell 311 points to hit the intraday low of 60,081.43. In the final 30 minutes of trade, it rose about 94 points but retreated sharply to end flat.

The index closed with a mild gain of 38 points, or 0.06 percent, at 60,431 while the Nifty ended at 17,828, up 16 points, or 0.09 percent.

With this, both the Sensex and the Nifty extended their gains into the ninth consecutive session.

Mid and smallcaps also ended with mild gains. The BSE Midcap index ended 0.16 percent higher while the Smallcap index rose 0.33 percent.

Some 106 stocks, including HDFC, Godrej Consumer Products, Indraprastha Gas, Max Healthcare Institute and Zydus Lifesciences, hit their 52-week high in intraday trade on BSE.

Crude oil prices traded volatile as concerns over a looming recession in the US weighed on. When economies slow, demand for fuel takes a hit. Brent Crude traded near the $87 per barrel mark.

The rupee rose 23 paise to end at 81.85 per dollar, per Bloomberg data, as the greenback held near two-month lows after the US inflation data came lower than expected which raised anticipation that the Fed may consider halting the rate hikes.

Top Nifty gainers and losers

Some 29 stocks ended in the green while 20 declined and one stock - Tata Steel - remained unchanged in the Nifty50 index.

Shares of IndusInd Bank (up 2.81 percent), HDFC Life Insurance Company (up 2.77 percent) and Eicher Motors (up 2.69 percent) ended as the top gainers in the Nifty index.

On the flip side, shares of Infosys (down 3.14 percent), Tech Mahindra (down 2.17 percent) and HCL Tech (down 2.01 percent) ended as the top losers in the index.

IT suffers, banks, financials shine

IT stocks suffered strong losses, dragging their sectoral index lower by two percent.

The Nifty IT index closed with a loss of 2.20 percent with all 10 components in the red. Shares of LTIMindtree fell 3.97 percent to end as the top losers in the index.

Other than the IT index, Nifty Pharma (down 0.76 percent), Media (down 0.74 percent), Healthcare (down 0.59 percent) and Oil & Gas (down 0.31 percent) also ended in the red.

On the other hand, bank and realty stocks logged healthy gains.

The Nifty Bank index closed with a gain of 1.38 percent. Nifty PSU Bank rose 1.45 percent while the Private Bank index rose 1.06 percent. Nifty Realty clocked a gain of 1.13 percent.

Experts' views on markets

Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities pointed out that the benchmark indices maintained their winning streak, but the sharp intraday gyration shows that the rally could be losing steam given the continuous upward movement over the past week or so.

"The market seems to be in an overbought zone and profit-taking could emerge in the next few sessions," said Chouhan.

Vinod Nair, Head of Research at Geojit Financial Services said that the Indian shares experienced a downturn, weighed down by IT stocks following weak quarterly earnings and a cautious outlook from the top IT firm, which flagged apprehensions over deferred spending and uncertainty in its BFSI segment.

Besides, the decrease in CPI inflation to 5.66 percent in India, coupled with the moderation of core inflation, supports the decision of the MPC to keep policy rates on hold. While US inflation cooled to 5 percent, anxieties grew globally after the FOMC minutes hinted at a possible "mild recession" due to the impact of banking turmoil, Nair observed.

Technical views on markets

As per Chouhan, the market is trading above 50 and 200-day SMA (simple moving averages) and on intraday charts, it is holding a higher bottom formation which is largely positive.

However, momentum indicators are indicating temporary overbought conditions and due to this, the market may be rangebound in the near future.

"For the bulls now, 17,700-17,600 would be the key support areas while 17,900-18,000 would act as a crucial resistance zone for the traders. Meanwhile, positive sentiment is likely to continue in Bank Nifty, and for the trend-following traders now 41,500 would be the sacrosanct support zone. Above this, it could move up to 42,500-42,700. On the flip side, below 41,500, the uptrend would be vulnerable," said Chouhan.

Rupak De, Senior Technical Analyst at LKP Securities said the critical moving averages are sitting comfortably below the current index value. The trend is likely to remain positive as long as it stays above 17,700. On the higher end, 18,000 will likely act as a crucial resistance.

Key market data

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Some of the most active stocks on BSE on April 13.
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Some of the stocks that hit their 52-week highs in intraday trad on BSE on April 13.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.

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First Published: 13 Apr 2023, 03:31 PM IST