On Tuesday, the mood on Dalal Street was dominated by the results of festive season sales. Some more data points came in supporting the case for the Bulls. That’s the reason why, after a long period, both the broader market indices and mid-cap index were able to end the day in the green territory.
NSE’s Nifty closed the trade at 11,428.30, a gain of 87.15 points or 0.77 per cent. Nifty 500, an even wider index, closed the day with a gain of 0.67 percent at 9,253. BSE’s Sensex finished the day with a gain of 291.62 points or 0.76 per cent at 38,506.09.
The festive season indicators also saw a reflection in auto stocks which largely were trading in the green, making the Nifty auto index to rise 2.23 percent and close at 7,688. While the initial gains in auto stocks may have happened due to short covering, towards the end of the day, higher than average volumes in cash segment indicated that some of the buying in auto sector was delivery-based institutional buying.
Another noticeable thing was that all the sectoral indices were in the green, except the Nifty IT index.
While one day moves cannot be taken as an indication of the change in trend, it has been witnessed that when IT sector is the only one to end in the red money is likely flowing from defensive to aggressive stocks.
Although some of the large cap IT stocks are yet to announce their results, if the trend of underperformance continues in the sector, especially on the day when weekly options contracts expire, it would indicate that some of the fresh money coming into market would be ready for risk investment.
Another thing which dominated the discussion on the Street was whether the asset quality of the banks would see the kind of pressure which was happening till few weeks back. Most private sector banks have direct or indirect exposure to the real estate sector. But if a large developer in the Delhi-NCR was able to sell a big premium project in just one single day, it was felt that the markets were being more pessimistic than what may be required.
For investors, it would be better if they keep a track on the earnings by companies in their portfolio, rejigging the holdings based on performance.
(Shilpa Nagpal is an analyst at Market Wizards Securities Pvt Ltd)