Volatility was the name of the game on Friday. NSE’s Nifty moved in a yo-yo fashion from a gain of more than 100 points in early morning trade to movement into the red territory by noon. Again, it moved up close to morning high of before ending the day with a gain of 66.70 or 0.59 per cent at 11,301.25. BSE’s Sensex witnessed similar moves ended the trade with a gain of 246.68 points at or 0.65 per cent at 38,127.08.
After all the volatility and the noise in the financial space, Nifty and Sensex gained closed to less than 1 per cent on a weekly basis. Given the fact that the market breadth was under pressure in most trading sessions of the week, and mid cap and small cap stocks were mostly on the losing side, it was a week which most traders would like to forget.
Friday’s trading session was largely saved by some of technology stocks, especially Infosys, which ended the day with gain of 4.19 per cent to close at 815. The bullish sentiment on Infosys came on the back of the results of TCS, which were largely in line with expectations. Also, the commentary which came in from TCS indicated that while there were worries of a slowdown in tech spending in the United States and other markets, Indian companies would be able to manage decent-sized contracts. More importantly, they would be able to get repeat orders in the Cloud and AI space.
Because large IT companies have similar macro operating environments, Dalal Street is going with the assumption that such companies would not show any major disappointment in the quarter ending in September. If IT stocks remain stable, Nifty and Sensex would likely stay range-bound as the pressure from financial sector stocks may be absorbed by tech stocks.
Another set of stocks which witnessed higher than usual volume was metals. A number of them witnessed rise on opening, on the back of the hope that China and US trade talks may yield results. But by end of the day, most of them shed the gains.
Given the way the markets react to results of a few early birds, sectoral bias is likely to dominate the earning season. If a company in the financial sector is unable to meet expectations, even if it’s by a few basis points, punishment to its stock is likely to be severe. But if a company from the industrial or IT spaces misses the guided growth, the Street might be somewhat kind to it.
(Shilpa Nagpal is an analyst at Market Wizards Securities Pvt Ltd)