Nifty, Sensex trim early losses, sell-off in IT, banking stocks weighs

The correction in the market has made large-cap valuations reasonable, note experts.

Domestic frontlines Nifty 50 and Sensex extended their rout to the afternoon session on January 17, trading with sharp cuts as the optimism from the past three sessions waned. Investors rushed to take profits off the table following the three-day technical pullback, as the bearish sentiment held strong.

However, the benchmarks trimmed their losses, with the Nifty 50 recovering almost 150 points from the intraday lows seen during the morning session.

At 12:04 pm, the Sensex was down 451.31 points or 0.59 percent at 76,591.51, and the Nifty was down 120.15 points or 0.52 percent at 23,191.65. About 1,540 shares advanced, 1,791 shares declined, and 105 shares unchanged.

Even though declining dollar index and US bond yields are positive, the declines are not adequate to arrest the sustained selling by FIIs. Therefore, any significant recovery in the market will be sold into, said experts.

"The correction in the market has made large-cap valuations reasonable. Nifty is now trading at around 19 times estimated FY 26 earnings. Therefore, long-term investors, who can ignore the volatility caused by FII selling, can use the dips to buy high quality largecaps. The bounce back of this segment is only a question of time," noted  V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

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Among sectors, the Nifty IT slipped over two percent as the weak Infosys guidance caused a sell-off in technology stocks. The banking index Bank Nifty also tumbled 1.5 percent, with private banks bearing most of the brunt of the selling.

On the flip side, the oil & gas indices surged, led by Reliance Industries' better-than-expected quarterly show. Shares of Reliance Industries Ltd. surged over 4 percent after several brokerages reaffirmed their ratings while raising their target prices following its strong performance across segments.

The key positive for RIL’s Q3 performance was the improvement in its retail business, with EBITDA rising 9.1 percent year-on-year (YoY) and 16.7 percent quarter-on-quarter (QoQ), exceeding estimates by 8 percent.

Shares of Infosys slumped 6 percent, tracking the near 6 percent plunge in the American Depository Receipts (ADRs) of the company listed on the New York Stock Exchange (NYSE) overnight.

While the information technology major's October-December earnings came in ahead of market estimates, its revised revenue growth guidance, hinting towards a weaker Q4 may have triggered the fall.

Private lender Axis Bank Ltd.'s earnings for the October-December 2024 period saw higher slippages and lagging deposit growth, leading to brokerages slashing their target price on the bank's stock.

Axis Bank reported a 3.83 percent rise in its net profit to Rs 6,304 crore in the third quarter of the current financial year 2024-25. On a sequential basis, net profit of the lender declined 9 percent. Shares of Axis Bank were down over 5 percent intraday.

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