Mid-day Mood | Markets extend early gains as Sensex soars 1,000 pts, Nifty reclaims 23,600; RIL, IT, bank stocks lead massive rally

Yesterday's selloff was largely driven by the fallout from the Adani issue, so a recovery from current levels is possible. However, a sustained recovery seems unlikely given the challenges ahead. While the broader market, especially midcaps, may seem strong, this is driven more by liquidity than fundamental strength. Large-cap stocks, particularly in banking and IT, remain fundamentally solid, whereas sectors like FMCG, metals, and oil & gas appear weak, he added.

Also read: Nifty IT index rises 2% after US labor market data boosts sentiment

All NSE sectoral indices rallied with notable outliers being PSU Bank, IT, and Realty index. Public sector lenders, trading higher by up to 3 percent, came under fire yesterday given their exposure to Adani Group companies. Heavyweights like SBI, Bank of Baroda, PNB, and Canara Bank lifted the index higher. Private banks such as ICICI Bank, HDFC Bank, and IndusInd Bank also performed well.

Nifty Realty also rose for a third consecutive session, taking the total returns to 27 percent since the start of the year, comfortably outpacing Nifty's gain of about 9 percent during the same duration. IT shares also rallied led by strong labour market data in the US.

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In a remarkable reversal, most of the Adani Group stocks turned positive and climbed as much as 3-4 percent on November 22 after the previous day’s massive sell-off triggered by bribery charges in the US against Gautam Adani. Ten of the 11 Adani Group companies, including cement players ACC, Ambuja, and Adani Total Gas, recovered from lows to trade in the green. Adani Energy Solutions was down 3.5 percent at Rs 673.

Fintech player Paytm was buzzing in trade, rising over 5 percent in the afternoon and extending gains for a fifth trading session, after Bernstein recently dished out a positive call on the fintech player. The international brokerage reaffirmed its bullishness on Paytm as the narrative for the beleaguered fintech player changes from survival to optimism. Bernstein hiked its target price on Paytm to Rs 1,000 per share, up from Rs 750 earlier.

India's largest public sector lender State Bank of India, rose over 3 percent to become the top gainer on the Nifty after Jefferies reiterated its "buy" rating with a target price of Rs 1,030. This suggests a potential 29 percent upside from current levels. Jefferies identified SBI as its top sector pick, emphasising the scope for improvement in the loan-to-deposit ratio (LDR) as deposit mobilisation gains momentum. SBI’s management has retained guidance for 14–16 percent credit growth and 10–11 percent deposit growth in the near term.

Shares of Praj Industries surged over 9 percent on November 22 after the company projected a three-fold revenue growth by 2030, fueled by rising interest in energy transition. Atul Mulay, President of Bioenergy Business, said the company aims to increase exports from 29 percent to 50 percent of total revenue by 2030, targeting Rs 10,000 crore in annual revenue, up from Rs 3,400 crore currently.

In the broader market, mid-cap and small-cap indices opened the session on a positive note, gaining 0.8 percent each. However, V K Vijayakumar of Geojit Financial Services urged caution, warning that many companies in this space are trading at "bubble valuations." India VIX, the barometer to assess market anxiety cooled off 3 percent to fall below the 16 levels.

"The improved risk appetite noted yesterday didn’t stop the market from slipping at the open, but it helped prevent further declines throughout the day. This could lead to attempts for more gains today, with the first target at 23,390," Anand James of Geojit Financial Services, said. " However, for stronger upward movement, the market needs to break the 23,480-23,565 range. If the market struggles to stay above 23,390, it may revisit levels between 23,100 and 22,800," he added.

Adani Enterprises, Tata Consumer Products, Adani Ports, and UltraTech Cement were key gainers on the Nifty. There were only two losers on the Nifty -- Axis Bank, and Sun Pharma.

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