Mid-day Mood | Indices trim morning gains to trade sideways; Nifty IT rises in

The benchmark Sensex and Nifty erased their morning gains to trade flat as the market prepares for the earnings seasons for the quarter ended December. The frontline indices are tracking mixed global cues, with the US Treasury yield inching towards the 4 percent mark on doubts regarding the US Federal Reserve’s rate cut plans.

At 11:48am, the Sensex was up 55.23 points or 0.08 percent at 71,902.84, and the Nifty was up 18 points or 0.08 percent to 21,676.6. About 1,278 shares advanced, 1,096 declined, and 11 traded unchanged.

The broader markets echoed the mood, with the Nifty Smallcap 100 and Nifty Midcap 100 clocking mild gains of around 0.15 percent each.

Sectoral trends

The sectoral indices traded mixed, with Nifty IT surging 1.2 percent in trade. Other sectoral winners included Nifty Metal, Nifty Realty and the auto index. Nifty Pharma and Bank Nifty recorded losses up to 0.6 percent.

Fundamental view

Analysts noted that the ongoing rally was driven by retail investors, not institutions. The midcap and smallcap indices clocked fresh highs, despite valuation concerns, as a result of the retail exuberance. Concerns regarding the valuations were raised, with experts predicting that a correction will be seen as valuations are unsustainable.

“The risk to the global rally can come from the Fed which may turn out to be less dovish than the market expectation. Latest data from the US indicate an economy which is not weakening as much as the Fed would like. So watch out for the Fedspeak,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Technical view

“On January 4, the Indian markets showed a smart move from the strong support of 21,500 levels. Traders are advised to buy the stocks on dips with a strict stop loss of 21,500 on a closing basis. Also, short-term traders should keep booking profits near the resistance of 21,750-21,800 levels,” said Deven Mehata, research analyst at Choice Broking.

He added that the charts of Bank Nifty indicate that it may get support at 48,100, followed by 47,800. If the index advances, 48,300 would be the initial key resistance, followed by 48,640.

On the radar

The US 10-year bond yield crossed the 4 percent mark for the first time from December 13. Oil prices fell 2 percent on Thursday, largely unwinding an earlier rally, as massive weekly gasoline and distillate stock builds overshadowed a larger-than-expected crude stock draw. On the other hand, gold prices rebounded from a two-week low on Thursday, as a pullback in the dollar lifted demand among investors who are looking at fresh better-than-expected payrolls data.

The US private sector added more jobs than anticipated in December, payroll firm ADP said Thursday, signalling a strong labour market could continue to support the economy despite higher interest rates.

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Key Nifty gainers
Adani Ports, Hero MotoCorp, Infosys and TCS

Key Nifty losers
Sun Pharma, Britannia Industries, Nestle India and Cipla

Key Sensex gainers
Infosys, TCS, Wipro and TechM

Key Sensex losers
Sun Pharma, Nestle India, IndusInd Bank and Kotak Mahindra Bank

Stock moves
Jupiter Wagons, BEML: The Jupiter Wagons stock gained 3.2 percent in early trade, while BEML shares jumped 3.5 percent after the companies bagged orders worth Rs 802 crore from the defence ministry.

HDFC Bank: Shares of HDFC Bank fell 0.7 percent after the bank reported its update for the October-December quarter of the current fiscal year.

Power Finance Corporation: After opening in the green on January 5, shares of Power Finance Corporation gave up their early gains, when the company raised its market borrowing programme to Rs 1.05 lakh crore.

Macrotech Developers: Shares extended the previous session’s rally, rising 9 percent in early deals after a positive Q3 business update. The realty firm on January 4 informed exchanges that it achieved its best-ever third quarter pre-sales performance of Rs 3,410 crore.

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