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IT stocks may remain resilient in spite of lofty valuations since there is good earnings visibility and improving prospects for growth
Indian benchmark equity indices swung between gains and losses in the early trade on Wednesday amid a mixed trend in Asian shares. At 10:16am, Sensex was at 52,873.05, up 11.87 points or 0.02%, while Nifty was at 15,820.00, up 1.75 or 0.01%.
HDFC, Asian Paints, Bajaj Finserv, Sun Pharma and ITC were among the top Sensex gainers. Titan, M&M, Ultratech Cement, RIL and HCL Tech were among the laggards.
Broader markets
The broader market mirrored gains of benchmark indices as the BSE MidCap index rose by 0.22% to 22,676 points. Likewise, the BSE SmallCap index was trading at 25,756 points with gains of 0.22%.
“A surprising but important development in the US market yesterday was the 7.2 bp crash in the US 10-year bond yield to 1.34%. This is a market indication that the growth recovery may be weaker than expected and, therefore, the Fed would continue to be dovish. This will calm equity markets and may further embolden equity bulls even though valuations are almost in bubble territory. FIIs continue to sell in cash markets, but the intensity of selling (Rs 540 cr yesterday) has come down,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Bank Nifty is showing strength and has further room to go up. IT stocks are likely to be in focus since TCS is all set to report Q1 results on July 8th. IT stocks may remain resilient in spite of lofty valuations since there is good earnings visibility and improving prospects for growth, added Vijayakumar.
Politics
The Union Cabinet reshuffle/expansion will be reportedly taking place on July 7 at 18:00 IST. This will be the first cabinet reshuffle in the second term of the Narendra Modi government.
Global Markets
Asian stocks are trading mixed on Wednesday tracking losses on Wall Street with the S&P 500 ending its seven-day winning streak.
US stocks stumbled on Tuesday as Wall Street kicked off the holiday-shortened week on concerns about the economic outlook and risks from Covid-19 variants.
The ISM Services index, a major gauge of the services sector was bogged down to 60% in June from a record high in the prior month, data released Tuesday showed.
Investors await the release of June Federal Open Market Committee meeting minutes due Wednesday for clues about the central bank’s behind-the-scenes discussions on winding down its quantitative easing program.