Sensex reclaims 53,000, Nifty jumps 39 points in early trade; IT stocks rally

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Indian equity benchmarks opened higher on Thursday tracking a positive trend in Asian markets. In early deals, Sensex climbed 53 points or 0.29% at 53,056, while the Nifty 50 index was at 15,893, up 39 points or 0.25%.

“IT results out so far including that of majors like TCS & Infosys indicate a strong order pipeline emboldening the companies to raise their revenue guidance to 14 to 17%. This augurs well for the industry and can invite further investments. So, this leg of the market remains strong. However, Nifty is likely to face resistance around 15900 since FIIs are consistent sellers at higher levels,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Global support to the markets comes from the Fed chief Powell’s remark that rates will remain near zero until “inflation goes persistently and materially higher”. This has further emboldened the equity bulls. Even though the broader market party continues, investors should exercise caution while buying into mid-small caps. Correction in the broader market, when it comes, can be sharp, cautioned Vijayakumar.

Earnings today

Wipro, Angel Broking, Avantel, Aditya Birla Money, Cyient, Ganesh Housing Corporation, Larsen & Toubro Infotech, Onward Technologies, Rama Paper Mills, Rollatainers, Tata Elxsi, and Tata Steel Long Products are set to release their quarterly earnings today.

Gainers & losers

Sectoral strand

Nifty IT advanced 0.42%, while Nifty Realty, Nifty Pharma and Nifty Bank advanced in the range of 0.15-0.25%, Nifty Metal was marginally up 0.03%. On the downside, the Nifty Auto lost 0.13%.

Broader market

BSE MidCap gained 0.30% at  23,024, while the BSE SmallCap index hit a new 52-week high of 26,409 gaining around 0.60%. The market breadth was positive as 1,210 shares advanced on the BSE, while 572 declined and 484 remained unchanged.

Global markets

Overseas, Asian stocks are trading mixed on Thursday as China reported its second-quarter gross domestic product (GDP) jumped.

China’s GDP rose 7.9% year-on-year in the second quarter, official data showed Thursday. Meanwhile, retail sales in June jumped 12.1% from a year earlier, data from the National Bureau of Statistics showed. Chinese industrial output rose 8.3% year-on-year in June.

China’s central bank partially rolled over maturing medium-term loans on Thursday, the same day when a cut in the banks’ reserve requirements takes effect.

The People’s Bank of China (PBOC) said in a statement it was keeping the rate on 100 billion yuan ($15.46 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions steady at 2.95% from previous operations.

US stocks closed flat on Wednesday after U.S. Federal Reserve Chair Jerome Powell soothed investor angst by saying a recent inflation spike will fade, helping lift the S&P 500 to a fresh intraday record.

Federal Reserve Chairman Jerome Powell said the central bank will maintain its easy monetary policies. Powell said in his semiannual testimony before the House Committee on Financial Services Wednesday that the central bank can wait before it starts to ease its bond purchases despite surging inflation readings. The Fed chair said he still expects inflation to moderate.

“At our June meeting, the Committee discussed the economy’s progress toward our goals since we adopted our asset purchase guidance last December. While reaching the standard of ‘substantial further progress’ is still a ways off, participants expect that progress will continue,” Powell said.