Taking Stock: Sensex, Nifty extend upmove led by IT stocks, broader markets outperform

Market breadth remained strong, with gainers outnumbering laggards.

Indian benchmark indices, Sensex and Nifty, extended gains from the previous session and ended higher on January 23, albeit off their day's highs. However, it was the broader markets--which houses small and midcaps, that staged a sharp rebound from yesterday's selloff, outperforming their larger cap peers.

At close, the Sensex was up 115.39 points or 0.15 percent at 76,520.38, and the Nifty was up 50.00 points or 0.22 percent at 23,205.35. Market breadth remained strong, with gainers outnumbering laggards. About 2,014 shares rose, 1,779 fell, and 108 remained unchanged.

Most sectors, barring banks--private and public and energy, ended in the green territory, with the Nifty IT index leading with its near 2 percent upmove. Other sectors, consumer durables, automobiles, pharma and media also closed 1-2 percent higher. On the flipside, the Nifty Bank and PSU Bank indices edged lower, while oil and gas slipped by 0.5 percent.

In the broader market, the Nifty Midcap 100 surged nearly 2 percent while the Nifty Smallcap 100 ended with 1.1 percent gains.

Among individual stocks, Ultratech Cement emerged as the top Nifty gainer with its over 6 percent surge, buoyed by the company's positive Q3 earnings. Grasim Industries, Wipro, Shriram Finance, Eicher Motors and M&M were the other top Nifty gainers, up 2-4 percent.

Among laggards, BPCL was the worst hit, down over 2 percent on the back of its Q3 numbers. Other losers included Kotak Mahindra Bank, HCL Tech and index heavyweight Reliance Industries which ended 1-2 percent lower.

Outlook for January 24

 Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan

Nifty witnessed a stable day of trade today. It opened marginally in the negative, however recovered and managed to close in the green up ~50 points. On the daily charts we can observe that the Nifty is trading in the range of 23420 – 23000 since the last three sessions. Bollinger bands are contracting indicating rangebound price action going ahead. A breach of the range on either side shall set the trend in that direction. Daily and hourly momentum indicators have a positive crossover which is a buy signal, however, prices are not showing corresponding strength. Thus, a decisive range breakout is required for a move to develop until then the rangebound price action is likely to continue.

Prashanth Tapse, Senior VP (Research), Mehta Equities

Markets were range-bound with a mixed bias intra-day and ended slightly higher as investors resorted to select buying in the beaten down IT, telecom and realty shares. The sharp fall in rupee against the dollar, which has been fuelling foreign fund outflows over the past few months, is making investors jittery.

With the ongoing corporate earnings outcome not so encouraging so far, and Budget round the corner, investors will play safe bets with a selective buying approach and mostly at global markets for cues.

Aditya Gaggar, Director, Progressive Shares

A relief rally was observed in the Mid and Smallcap segments, which helped the Index compound its gains. However, due to lack of a follow-through, the Index remained within a range and ultimately ended the weekly expiry trade at 23,205.35 with gains of 50 points. The rally was primarily driven by IT stocks, followed by Pharma, while Banking indices lagged. The Broader Market outperformed the Frontline Index, with Mid and Smallcaps surging over 1 percent.

As noted yesterday, the positive divergence in the RSI worked well, but for a trend reversal to be confirmed, the Index needs to break through the strong resistance level at 23,400. Meanwhile, 23,000 will continue to act as support.

Ajit Mishra, SVP- Research, Religare Broking 

The markets extended Wednesday's rebound on the weekly expiry day, ending with modest gains. The session began on a subdued note, but selective buying in heavyweights triggered a gradual recovery in the first half, followed by a range-bound phase until the close. Ultimately, the Nifty index settled at 23,205, up 0.22%.

Sectoral trends were mixed, with IT and pharma sectors closing higher, while banking and energy remained subdued. After two consecutive days of decline, the broader indices also saw a breather, gaining between 1% and 1.7%.

The recovery in IT majors has been the primary driver of the index's rebound, with other sectors providing rotational support. However, we recommend not reading too much into this bounce and sticking with a "sell on rise" strategy for the Nifty index. At the same time, stock-specific opportunities remain plentiful across sectors, so participants should focus on maintaining balanced positions on both sides.

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