Indices in India have been in a secular rally, hitting fresh highs almost every day. Foreign investors have continued to provide thrust to the market but expensive equities seems to have spooked investors finally.
“IT index is up by 11 per cent in 2021 so far. Clearly, IT is now leading the market. However, investors have to consider the fact that valuations are also high. In contrast to the IT index, the banking index is performing poorly on NPA concerns. Yesterday, the beaten-down PSU bank stocks saw a rebound on value buying. Previous experience is that the rallies in this segment are trading rallies. For investment, it is better to stick with the quality names in large private sector banks,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Factors driving markets
- Trump impeached, again: The US House of Representatives passed a single article of impeachment accusing President Donald Trump of “incitement of insurrection”, making him the first president in US history to be impeached twice.
- US inflation rises: US consumer prices increased solidly in December and inflation could temporarily accelerate this year as the government provides more money to stimulate the economy.
- Stimulus coming: Biden will press Congress on Thursday to deliver immediate pandemic “rescue” efforts before turning to broader “recovery” measures like healthcare and infrastructure, the incoming administration’s top economic adviser said on Wednesday.
How are bluechips doing
After opening in the red, benchmark indices dropped further. At 10.05 am, BSE flagship Sensex was down 136 points or 0.27 per cent to 49,357. NSE benchmark Nifty followed and fell 46 points or 0.32 per cent to 14,518.
In the 50-share pack Nifty, IndusInd Bank was the biggest gainer, up 3.88 per cent. GAIL, UPL, ITC, Britannia, BPCL, L&T, Bajaj Finserv and Hero MotoCorp were among other gainers.
Wipro was the top loser in the pack, down 3.07 per cent. HCL Tech, Infosys, Tech Mahindra, Asian Paints, JSW Steel, Cipla, UltraTech Cement, Maruti Suzuki and Tata Motors were other losers in the pack.
Broader market indices traded mixed, outperforming their headline peers in the morning trade. Nifty Smallcap fell 0.16 per cent while Nifty Midcap was flat. Broadest index on NSE, Nifty 500 was down 0.28 per cent.
Bharat Dynamics, Aegis Chemicals, Amber Enterprises, L&T Tech Services, Voltas and BEL were among major gainers from the space while SAIL, HUDCO, Varun Beverages, Vakrangee, Dixon Tech and RVNL were under selling pressure.
Japan’s Nikkei rose 1.4 per cent to its highest point since August 1990. It is up more than 8 per cent in three weeks. MSCI’s broadest index of Asia-Pacific shares outside Japan was steady and just a whisker short of Monday’s all-time high.
S&P 500 futures rose 0.2 per cent and EuroSTOXX 50 futures rose 0.3 per cent.
What to expect:
- Q3 earnings: DEN, Reliance Industrial Infra and HFCL will come out with their numbers.
- Macro data: The government will release wholesale inflation data for December.