Bulls extended gains on January 5 morning deals as benchmark indices S&P BSE Sensex and NSE Nifty 50 rose 0.3 percent each to 72,074 and 21,728, respectively. Market observers believe that the ongoing rally is driven by retail investors amid ample liquidity.
"An important feature of the ongoing rally in the market is that retail investors, not institutions, are calling the shots," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
On the other hand, Kranthi Bathini, Equity Strategist, WealthMills Securities, remained positive on overall sentiment, calling this rally to be a 'liquidity' driven one. "We need to wait and watch out how Q3 results pan out as markets have built a strong set-up," he told Moneycontrol.
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India Inc's December-ended quarter (Q3FY24) results will kick off next week, with IT major Infosys reporting its quarterly figures on January 11, 2024, followed by Tata Consultancy Services (TCS) and HCL Technologies.
Ahead of Q3 results, IT stocks hogged the limelight on Friday's morning trade with Nifty IT surging over 1 percent, led by gains in Infosys, TCS, LTIMindtree, and HCL Tech.
Analysts on a consensus expect IT industry to showcase a muted sequential growth in Q3 due to near-term headwinds such as prolonged higher inflation, delay in discretionary projects, and sluggish future earnings growth.
"Despite industry challenges, there is optimism in the sector, which is driven in anticipation of the end of the rate tightening cycle, which is expected to accelerate the resumption of delayed projects," said Vinod TP, Research Analyst at Geojit Financial Services.
Other than that, the top sectoral performer in the first hour of trade was the Nifty Realty index, jumping over 2 percent to hit an all-time high. On the other hand, defensive plays such as FMCG and Pharma lost favour on Friday as both the sectors slipped in negative territory.
Meanwhile, broader indices Nifty Midcap 100 and Nifty Smallcap 100 outperformed Nifty 50 by rising 0.6 percent each. However, analysts said that this was an effect of retail exuberance, and that a correction is on the anvil.
"The excessive valuations of the broader market cannot continue for long. Big corrections are likely in the broader market; the only question is when," warned Vijayakumar of Geojit Financial Services
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