Nifty, Sensex off highs but trade in the green as metals, pharma rally; IT slips ahead of Q3 earnings

ONGC, Tata Consumer Products, IndusInd Bank, Tata Motors, and Reliance Industries were the top gainers on the Nifty.

Benchmark indices Nifty and Sensex traded firmly in the positive in the afternoon on January 7 after gains in metal, pharma and oil and gas stocks lifted sentiment following a two-day rout on the exchanges. IT stocks came under selling pressure as TCS kicks off Q3 earnings on Thursday.

This comes just a day after Indian equity markets witnessed a bloodbath at the start of the week, as the benchmark indices shed 1.5 percent on January 6 amid fears about Human Metapneumovirus (HMPV) weighing on investor sentiment.

At noon, the Sensex was up 237.45 points or 0.30 percent at 78,202.44, and the Nifty was up 101.50 points or 0.43 percent at 23,717.55. About 2360 shares advanced, 1043 shares declined, and 78 shares unchanged.

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V K Vijayakumar of Geojit Financial Services said that the 1.6 percent drop in Nifty yesterday appears to be an overreaction to HMPV virus concerns, driven largely by short selling as bears capitalized on negative sentiment. Despite FIIs selling Rs 2,575 crores, DIIs offset it with Rs 5,750 crores in buying. The decline, coupled with the resilience of pharma stocks and weakness in momentum stocks, reflects cautious market sentiment. However, government assurances that the virus poses no new threat could spark a rebound led by momentum stocks. Investors may consider using the dip to accumulate strong beaten-down names in the automobile and financial sectors.

The broader market, encapsulating the mid and small cap indices, mirrored positive trends following a sharp fall of about 3 percent in the last two trading sessions. The two rose 1 and 1.1 percent, respectively. In 2024, Nifty Smallcap 100 and Nifty Midcap 100 indices surged over 20 percent each to outpace Nifty's 9 percent gain.

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Among sectoral indices, the Nifty Metal index received robust investor interest with gains of 1.2 percent. Sharp gains in Vedanta, Hindalco, and JSW Steel helped the index higher. Nifty Energy was also among the top gainers, rising over 1 percent after ONGC, Oil India and Coal India rallied. Nifty Pharma and PSU Bank index also rose almost a percent each. On the other hand, IT sector slipped 0.6 percent led by TCS, HCL Tech, Infosys, and Tech Mahindra.

Shares of Titan Company climbed 3 percent to Rs 3,576 in early trade on January 7, marking their fifth consecutive session of gains. The rally comes as brokerages turned bullish on the stock, buoyed by the company’s impressive 24 percent growth in the December quarter. In a filing with the bourses, Titan shared that its combined retail network presence (including CaratLane and international stores) expanded by 69 stores in the quarter to reach 3,240 stores.

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Paras Defence shares jumped over 7 percent to Rs 1,040.35 on January 7 after receiving a license under the Arms Act, 1959, to manufacture MK-46 and MK-48 LMGs. The stock, which rose as much as 10 percent intraday, remains 40 percent below its peak of Rs 1,592.7.

Zydus Lifesciences share price advanced over 5 percent in trade today after the company announced an agreement with US healthcare firm CVS Caremark to add its diabetes combination products to its template formulary.

"The uncertainty surrounding the virus adds another layer of risk, necessitating close monitoring. Until there is clarity or relief on these fronts, investors should avoid attempting to "catch a falling knife," as the sell-off may persist," Sameet Chavan, Head of Technical and Derivative Research at Angel One, said.

"On the upside, any interim bounce is unlikely to be sustained, with the 200 DSMA around 23900–24000 expected to act as immediate resistance. A decisive breakout above 24200 is essential to signal a resumption of the uptrend. Additionally, midcap and small-cap stocks were the hardest hit and continue to appear vulnerable. Traders are advised to exercise caution and maintain a light exposure to these segments for the time," he added.

ONGC, Tata Consumer Products, IndusInd Bank, Tata Motors, and Reliance Industries were the top gainers on the Nifty. TCH, HCL Tech, BPCL, Tech Mahindra and Eicher Motors were the top laggards.