Nifty settles above 25,000, Sensex extends gains to fifth session as IT stocks outshine

Dalal Street has gained for five consecutive sessions.

Dalal Street extended its winning momentum for the fifth consecutive session in trade on Wednesday, August 20, as investors continued to remain optimistic around the Centre's plan to rationalise Goods and Services Tax (GST).

At close, the Sensex was up 213.45 points or 0.26 percent at 81,857.84, and the Nifty was up 69.90 points or 0.28 percent at 25,050.55. About 2071 shares advanced, 1588 shares declined, and 124 shares were unchanged.

"The three-day 364-point rally in the Nifty came in response to the unexpected announcements relating to GST reforms which are likely to happen before Diwali. The market has been responding to the potential demand boost to sectors like automobiles, FMCG, insurance and select financials which are expected to benefit from the GST rationalisation," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

He added that any improvement in India-China relations also have contributed to the rally. However, there is no scope for a sustained rally since the August 27th deadline for the 25 percent secondary tariff on India is fast approaching, and the news coming from the Trump administration is not positive.

"President Trump’s tariff policy, totally devoid of logic and fairness, and driven solely by personal likes and dislikes, may continue. This will have negative implications for India in the short-term, and the market will have to discount that, too," noted the Geojit analyst.

The sectoral performance for the session was also mixed. Nifty IT led the gains with a sharp 2.6 percent rise, followed by Nifty FMCG up 1.32 percent and Nifty Realty higher by 1.01 percent. Nifty Metal, Energy, Infra, and Auto also ended marginally positive.

On the other hand, Nifty Media slipped the most, down 1.94 percent, while Nifty Pharma fell 0.42 percent and Nifty PSU Bank eased 0.24 percent.

Information and technology stocks rallied sharply, with the Nifty IT index surging 2.6 percent as information and technology giant Infosys paid out 80 percent of its variable pay to employees, amid a positive Q1. Further, optimism around the U.S. Federal Reserve trimming the benchmark lending rate spurred the rally too.

On the technical front, the Nifty 50 has regained strength after witnessing two sessions of winning streaks from the close above the 50EMA level of the 24,800 zone and has retested the 25,000 level once again, expecting further rise in the coming sessions.

"With the undertone maintained positive along with the broader markets indicating active participation, the index is maintained positive, and as mentioned earlier, once the level of 25,100 is breached decisively, we can anticipate higher targets of the 25,200 and 25,300 levels in the coming days," said Vaishali Parekh, Vice President - Technical Research, PL Capital.

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