133497In view of reduced inflation and expenses, will it be right to invest in IT stocks?

At the onset of the week, Indian benchmark indices concluded strongly, with the Nifty surpassing the 22,650 mark. By the market close, the Sensex had risen by 494.28 points or 0.67 percent to reach 74,742.50, while the Nifty had gained 152.60 points or 0.68 percent, closing at 22,666.30.

During trading hours, the market opened with a surge, hitting a peak as the Sensex soared by over 600 points to establish a new record at 74,869. Concurrently, the Nifty approached a significant milestone near 22,700. This led to a notable increase in the combined market capitalisation of all listed stocks on the BSE, rising by Rs 1.3 lakh crore, surpassing the Rs 400 lakh crore threshold for the first time. The majority of this uptick in market value was propelled by blue-chip stocks.

The market hit the highs for following reasons.

Global markets

Nasdaq and S&P 500 surged over 1% post-US job creation data, spurring gains in Asian markets like Hong Kong, Tokyo, Sydney, Seoul, Singapore, and Taipei.

Crude oil

Crude oil prices fell over $1 as Middle East tensions eased with Israel’s troop withdrawal from southern Gaza, pushing Brent below $90 a barrel.

Institutional buying

Institutional investors, particularly FIIs, drove Nifty heavyweight gains, with foreign investors netting Rs 1,700 crore in purchases last Friday amidst ongoing retail investor support.

Impact of business updates

Pre-quarterly report releases boosted stocks: Info Edge soared 9% on strong Q4, Voltas rose 7% with 20 lakh AC sales in FY 2023-24, Nykaa climbed 6% on anticipated high-twenties YoY revenue growth.

Earning expectations

March quarter earnings season begins, with TCS coming out with its results on March 12; Motilal Oswal anticipates 6% YoY Nifty earnings growth, while Kotak Equities predicts 4%.

 Pre-election rally

Investor optimism surged in anticipation of the 2024 general elections. It’s common to witness a stock market rally leading up to elections. Haitong International noted, “There’s widespread anticipation that Prime Minister Narendra Modi’s BJP will retain power. Modi continues to enjoy popularity among the majority of Indians, while the opposition alliance struggles with internal conflicts and defections.”