Infy rises 3.8% after good show: Shares zoom on global rebound; IT, banks gain big

Equities posted gains of more than 1% on Friday, trimming weekly losses, amid strong global cues. The Sensex gained over 1,000 points intraday, led by IT bellwether Infosys and banking stocks. Infosys rose 3.8% after the company reported a better-than-expected rise in the net profit and said it would buy back its shares. The Sensex closed at 57,919, a gain of 1.2%, while the Nifty settled 1% higher at 17,185.

Among sectors, banks and IT gained the most while power and oil & gas indices lost the most. Broad market indices underperformed as the focus was on the frontline largecap stocks. The advance-decline ratio, however, improved to 0.95:1. Volumes on the NSE were below normal.

FPIs sold shares worth Rs 1,011 crore on Friday while domestic institutions purchased shares worth Rs 1,624 crore, provisional data showed. In the year to date, overseas investors have offloaded shares worth $23.2 billion.

US consumer prices surged to a 40-year high in September, which may put pressure on the Federal Reserve to raise interest rates more aggressively. This may keep Indian equities volatile in near future.

“FPI flows into India have turned negative for the last few sessions after a positive start in October. As a result, the broader market has been moving sideways despite expectations of a strong earnings season,” said S Hariharan, head of sales trading at Emkay Global Financial Services.

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“We expect the current bout of macro volatility to continue to cap any meaningful upsides in the indices, strong fundamentals notwithstanding. Consumer staples and discretionary names have been seeing some pressure on account of concerns related to margins going forward with commodity prices picking up again,” said Hariharan.

Asian equities snapped a five-day losing streak on Friday, tracking a rally in the US markets, with investors looking to China’s twice-a-decade party congress for policies to help revive its economy and markets. Taiwan Weighted and Kospi ended with gains of over 2%. European shares climbed on Friday as hopes grew of a U-turn in some of the fiscal measures announced by the British government.

Foreign brokerage BofA Securities on Thursday cut the year-end base case target for 50-share Nifty to 17,500 from 18,500, citing weakening macro, higher crude, rupee depreciation, global slowdown and China revival. The trading range has been cut to 16500-18500 from 17000-19500 earlier.

The brokerage continues to favour domestic cyclicals such as financials and industrials and defensives such as utilities and healthcare. It has upgraded staples as a hedge towards volatile markets and continues to be underweight on external-facing sectors such as IT, materials and energy.

“Nifty has formed a higher bottom over a three-week period. Once it breaches 17,429, it will also make a higher top. On upmoves, 17,348-17,429 could offer resistance while 17,112 and later 16,855 could offer support. An upward breach of 17,429 could result in broad-based and volume-led rally in the markets,” said Deepak Jasani, head of retail research at HDFC Securities.