Mid-day Mood | Rebound in IT stocks helps indices come off the day's low

IT, realty stocks help indices rebound from the day's low.

The Indian equity market staged a slight recovery in trade on August 16, with the benchmark indices coming off their early lows on the back of gains in prominent information technology names.

The benchmark indices had opened lower, mirroring sell-off across global markets after credit ratings agency Fitch warned of downgrading as many as 10 US banks, including the likes of JP Morgan. Most Asian and US benchmark indices had fallen around 1 percent on the back of this development.

The warning from Fitch comes a week after Moody's downgraded its ratings for ten US regional banks. Fitch Ratings had also downgraded the US’ sovereign credit rating earlier this month, citing "ballooning fiscal deficits and erosion of governance" that have caused repeated debt limit emergencies over the past two decades.

A recovery in several frontline IT stocks after a mega deal win by Infosys, however, eased concerns of a slowdown in deal wins and helped indices rebound from their day's lows. Around 11.30am, the Sensex was down 113.86 points or 0.17 percent at 65,288.06, and the Nifty was down 48.70 points or 0.25 percent at 19,385.80. The benchmarks had hit their day's lows of 65,032.89 points and 19,317.20 points earlier in the session.

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Index heavyweight Infosys topped the list of gainers on the Nifty 50, rising around 2 percent the IT major bagged a €1.5-billion ($1.6 billion) deal from Liberty Global. The deal comes after rival HCL Technologies won a $2.1-billion contract from US telecom major Verizon Business last week.

Strong deal wins from the two major IT players helped boost sentiment for the sector and triggered gains of around 1 percent for HCL Tech, Wipro and Tech Mahindra, as the stocks led the list of gainers on the headline Nifty50. Strong gains in IT counters also lifted the Nifty IT index around a percent higher. Another sector that floated in the green was Nifty Realty which was up 0.5 percent amid gains in Phoenix Mills and Sunteck Realty.

A slew of large deals also took place on the bourses, fuelling stock-specific action. The most prominent among them was InterGlobe Aviation whose promoter, the Gangwal family, likely pared off another 5.1 percent stake in the low-cost carrier in a deal worth Rs 4,837 crore. The stock slumped 4.5 percent after the block deal.

IIFL Securities also jumped over 5 percent after a huge block deal, involving a 3.9 percent stake took place on the bourses, the buyers and sellers of which could not be immediately identified.

The exit of Deloitte as the statuary auditor of Adani Ports and Special Economic Zone continued to drag the stock down over 1 percent. On the other hand, pharma major Divi's Labs also slipped over 1 percent after its April-June earnings disappointed brokerages. Analysts also believe that the pricey valuations of the stock prices in its near-term growth triggers, leaving very little room for a sharp upside.

Several sectors like automobiles, infra, banks, metals and pharma were also struggling in the red. However, the trend was mixed in the broader market with the Nifty Midcap 100 falling 0.2 percent while the Nifty Smallcap index rose 0.2 percent.

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