Sensex, Nifty fall amid weakness in IT stocks; volatility likely to stay, say analysts

Some relief was seen in mid-and smallcap indices, however, analysts believe that the worst is not completely over

Benchmark indices the Sensex and the Nifty traded down on March 22 morning, pulled down by IT stocks after tech giant Accenture cut its revenue guidance over uncertain economic environment.

The Sensex and the Nifty declined 0.3 percent each to 72,379 and 21,943 on March 22 morning. The market breadth was still in favour of gainers as around 1,699 shares advanced, 827 declined and 111 were unchanged.

Mid and smallcap indices rose marginally in opening deals but analysts said worst is not over yet. Volatility is likely to persist in the near term and a decisive close above 22,300 can help the Nifty move higher.

Vaishali Parekh, vice president of technical research at Prabhudas Lilladher, said that the Nifty needs to move past 22,300 zone to strengthen positive bias and retest previous peak of 22,525.

ALSO READ: Time to shop? Here's a list of High dividend paying smallcaps stocks

Deven Mehata, Research Analyst at Choice Broking, said te Nifty faces resistance at 22,100, followed by 22,150 and 22,200. "The support for the day is at 21,950 followed by 21,900 and 21,800," he added.

Sectorally, Nifty IT was the worst hit as it slipped over 3 percent, with TCS, Tech Mahindra, and Infosys leading the losses. Accenture's revised outlook anticipates full-year revenue growth to be within the range of 1 percent to 3 percent, compared to its earlier projection of 2 percent to 5 percent.

Accenture's performance is widely regarded as a benchmark for the Indian IT industry, providing a glimpse into the expected outcomes for Indian IT companies. The fourth quarter earnings season commences on April 12, with bellwether TCS reporting its earnings.

On the flipside, Nifty Realty index was the top sectoral performer as it gained over a percent led by Prestige Estates, Brigade Enterprises, and Sobha.

In view of the truncated next week with only three trading days, volumes have dipped significantly in recent days, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. This, he expects to continue in the next few days as well. "Any big intraday dips are likely to be bought since DIIs are sitting on big cash and there is value in pockets of largecaps like banking," he suggested.

ALSO READ: Hot Stocks: BSE, Sapphire Foods, Cummins India may deliver 15-20% returns in short term

US indices, Japan's Nikkei 225 at record highs

Globally, all major averages in the US markets closed at record levels overnight. Dow Jones, tech-heavy NASDAQ Composite, and the S&P 500 indices gained up to 0.7 percent after investors were reassured of 3 interest rate cuts this year from Fed's 'dot plot.'

Elsewhere, Japan's Nikkei 225 crossed 41,000-mark to hit an all-time high after inflation rose to 2.8 percent in February, much above market expectations of 2.2 percent. However, Hong Kong's Hang Seng plunged by 3 percent and Australia's S&P 200 fell 0.3 percent this morning.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.