Sensex, Nifty pare gains as IT, FMCG stocks tumble; mid, small caps outperform

Adani Enterprises, Adani Ports, NTPC, Hindalco and Bajaj Finance were the top gainers on the Nifty.

Benchmark indices Nifty and Sensex rebounded on January 14, breaking a four-day losing streak, driven by a sharp rally in metal and public sector bank stocks. However, weak Q3 results from HCL Tech weighed on IT stocks, tempering the overall market sentiment.

The broader market, comprising the mid-small cap indices, also attracted buying interest with gains of nearly 2 and 1.6 percent, respectively. Amid fears of stretched valuations and the overall negative sentiment prevailing in the market, the two have had a torrid start to the year, falling nearly 10 percent.

Today's gain comes just a day after the Sensex and Nifty recorded their steepest fall in seven months, levels last seen on June 11, 2024. Data showed that Rs 12.39 lakh crore was eroded in market cap.

At noon, the Sensex was up 274.42 points or 0.36 percent at 76,604.43, and the Nifty was up 93.45 points or 0.40 percent at 23,179.40. About 2508 shares advanced, 923 shares declined, and 87 shares unchanged.

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"A strengthening dollar, 10-year US bond yields rising to above 4.7 percent, uncertainty regarding Trump’s actions after January 20th, a slowdown in India’s economy, poor corporate earnings, and a sharp surge in crude has combined to cause this market correction," says V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

He also said that the market is a bit oversold and this favours a bounce back in the near term. There is more pain likely in mid and small caps. "There was a message from the net institutional activity in the market yesterday. DII buying was Rs 3174 crores higher than FII selling. This means that smart money like HNIs are also selling in the market," he added.

Also read: Why analysts are turning bullish on RIL

Among sectoral indices, Nifty IT was the major laggard with losses of over a percent. This comes following HCL Tech's Q3 disappointed investors. Nifty FMCG also slipped 0.6 percent led by HUL, Nestle and Britannia. Nifty Metal rallied almost 4 percent after gains from Hindalco, Adani Enterprises and JSW Steel lifted the index. Nifty Realty, which crashed 6 percent yesterday, gained over 1 percent on January 14. Auto, Nifty Bank and Oil and Gas also gained 1 percent each.

Adani Group stocks rallied as much as 17 percent amid high volumes. Adani Power, Adani Green Energy, Adani Energy Solutions, Adani Total Gas, and Adani Enterprises have surged between 5 percent and 12 percent. Additionally, Adani Ports and Special Economic Zone, ACC, and Ambuja Cements have gained between 2 percent and 3 percent.

Read more: Morgan Stanley sees 31% upside on MGL shares, says natural gas is 'the fuel of the future for Mumbai'

HCL Tech shares plunged nearly 10 percent after brokerages remained on the sidelines after industry major HCLTech's Q3 earnings, though in line with expectations, failed to deliver upside triggers. While the management commentary over deal wins remained upbeat, the marginal revision in revenue growth guidance hinted at a weaker Q4 for HCLTech, leaving brokerages disappointed.

Shares of JSW Energy zoomed 7 percent on January 14 after the company received a Letter of Intent (LoI) for the acquisition of KSK Mahanadi Power Company, currently under insolvency proceedings. The power company owns a 3,600 MW thermal power plant, located in Chattisgarh. The Letter of Intent (LoI) follows the approval by the Committee of Creditors, with the completion of the transaction contingent on receiving the necessary regulatory clearances from the National Company Law Tribunal and the Competition Commission of India.

"Key support is seen in the 22,830 - 23,000 range, with several near-term time cycles aligning between January 17 and 23. Resistance lies in the 23,450 - 23,500 zone, as prop oscillators remain bearish on both daily and weekly charts," Akshay Chinchalkar, Head of Research at Axis Securities, said. "However, with only 11 percent and 13 percent of stocks in the NSE500 above their 50-day and 100-day moving averages, downside extremes are being tested, suggesting a potential short-covering rally may be near, especially as a time-reversal zone approaches, " he added.

Adani Enterprises, Adani Ports, NTPC, Hindalco and Bajaj Finance were the top gainers on the Nifty. Laggards included HCL Tech, HUL, Apollo Hospitals, Titan Company, and Infosys were the major laggards.