Nifty, Sensex rise as auto stocks see sharp rally; IT index falls ahead of earnings

Maruti Suzuki, Britannia Industries, Cipla, ITC and Kotak Mahindra Bank were among the major gainers on the Nifty

After two days of consolidation, Nifty and Sensex opened on a strong note buoyed by auto and pharma stocks. On the other hand, IT stocks slipped ahead of earnings this week.

At about 9:40 am on July 9,  the Sensex was up 0.28 percent at 80,184 and the Nifty was up 0.23 percent at 24,375. About 1,992 shares advanced, 1,007 shares declined, and 131 shares unchanged.

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"The markets are likely to consolidate this week after a phenomenal rally and recovery after elections," Kranthi Bathini director of equity strategy at WealthMills Securities, said in a conversation with Moneycontrol. He also added that the positive all-round sentiment is intact and investors will keenly watch for earnings and the budget on July 23. The Nifty has surged over 4 percent since the elections.

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As for the midcap and smallcap index (broader market), they resumed their outperformance of the headline indices and notched higher by 0.5 and 0.6 percent respectively. The midcap index has gained 2 percent since the start of July.

Public sector lenders were also buzzing in trade. India's largest government-owned bank SBI was the top performer followed by Union Bank and Canara Bank.

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Among specific sectors, the IT index was the major laggard, slipping 0.2 percent. In the index, Infosys and Tech Mahindra fell the most. The auto index was the best performer, rising over one percent in early trade with Maruti Suzuki and Ashok Leyland being the top gainers.

Information technology (IT) shares will be in focus this week as TCS and HCL Tech kick off earnings season. Market experts suggest that consolidation and weak performance in IT is largely over and valuations look attractive from a long-term perspective.

The VIX or fear gauge rose further by 1.4 percent to around 13.8. VIX is a real-time market index representing the market's expectations for volatility over the coming 30 days.

"Our downside marker of 24,250 held throughout yesterday despite several attempts to slip. This encourages us to continue eying 24,720-800 as the near-term objectives as maintained yesterday," Anand James, chief market strategist at Geojit Financial Services said. "But given the lack of momentum, if 24,350 continues to repel upside attempts, be warned against a slippage towards 24160- 130," he added.

Maruti Suzuki, Britannia Industries, Cipla, ITC and Kotak Mahindra Bank were among the major gainers on the Nifty, while losers were Shriram Finance, JSW Steel, Reliance Industries, BPCL and Tech Mahindra.