Dalal Street rallied after a day off due to Dussehra as the Sensex rose more than 800 points in early trade on Wednesday, while the Nifty climbed above 23,100, as a rally in information technology stocks, gains in Reliance Industries ahead of the Jio Platforms IPO and buying in beaten-down stocks lifted investor sentiment.
The BSE Sensex was trading at 74,674.32, up 821.42 points or 1.11%, around 9:39 am. The NSE Nifty 50 gained 226.75 points, or 0.99%, to 23,115.70 around 9:41 am.
The recovery comes after the benchmarks fell sharply on Monday, with the Sensex losing 876 points and the Nifty slipping below the 23,000 mark. Wednesday’s gains suggest investors are returning to select large-cap stocks, although elevated crude oil prices remain a risk.
Here are three reasons why the stock market is rising today.
Information technology stocks were the biggest drivers of the market’s early gains, with the Nifty IT index rising around 2.4% in the latest snapshot.
Infosys shares climbed 3.42%, while TCS gained 2.64%, Wipro rose 3.74%, HCLTech advanced 2.10% and Tech Mahindra added 1.68%. The gains came as investors responded to quarterly earnings and management commentary from major IT companies.
Tech Mahindra’s stronger-than-expected revenue performance, supported by robust deal wins, and Wipro’s revenue beat have helped improve sentiment towards the sector. Investors are looking for signs that demand is holding up and delayed large deals could support growth in coming quarters.
The global sell-off in AI-linked stocks is another factor being watched by investors. If global investors reassess highly valued AI stocks, Indian IT services companies could attract interest as an alternative technology investment. However, the impact will depend on global technology spending, deal conversion and the earnings outlook of Indian companies.
Reliance Industries shares rose 2.31% in early trade as its digital and telecom subsidiary, Jio Platforms, opened its IPO for subscription on Wednesday.
The $3.2 billion issue is set to become India’s largest-ever IPO. The offering has drawn attention from investors after Jio Platforms raised $853.3 million from anchor investors, including the Abu Dhabi Investment Authority, BlackRock and Fidelity.
The IPO has put Reliance and Jio Platforms in focus, with investors watching the response to the issue and the potential implications for the group’s digital and telecom businesses.
Reliance’s gains also provided support to the benchmark indices, alongside advances in major IT stocks and other large-cap companies.
Buying in large-cap stocks after the recent correction is another factor supporting Wednesday’s recovery.
The Sensex fell 876.37 points, or 1.17%, on Monday, while the Nifty dropped 1.11% to close below 23,000. The decline was led by private banks and IT stocks, amid concerns over quarterly earnings, margins and elevated crude oil prices.
Wednesday’s gains suggest some investors are using the recent weakness to accumulate stocks whose valuations and earnings outlook appear attractive. The recovery was broad enough to lift most sectoral indices, including PSU banks, private banks, realty, pharma, auto and metals.
However, buying remains selective. Bajaj Finance shares fell 1.38% in the latest snapshot, while Bajaj Finserv, Bharat Electronics and Trent also traded lower. This indicates that the rebound is not uniform across all stocks.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said elevated Brent crude prices and US bond yields could keep the market under pressure, with a “sell on rally” trend likely to persist in the near term.
He said improving earnings growth, fair valuations among large-cap stocks and strong domestic liquidity could support the market during declines. IT and banking stocks, which had lagged earlier, have performed well in the second-quarter results season and are attractively valued, he added. Further corrections in these sectors could attract domestic institutional buying.
Vijayakumar also expects market action to become more stock-specific and sensitive to quarterly results as the earnings season progresses. Despite external headwinds, he described the current environment as a stock picker’s market.
For investors, the key factors to watch are whether IT earnings momentum continues, how the Jio Platforms IPO is received and whether buying in large-cap stocks can sustain the recovery. Brent crude above $110 a barrel remains a significant risk, as higher oil prices can pressure India’s import bill, the rupee and inflation outlook.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)