NEW DELHI: The stage was set for the NSE Nifty50 to hit the 20,000 milestone on Friday but the two benchmarks- Nifty and Sensex- plummeted by more than 1% and broke a 6-day winning streak. Owing to an 8% slump in Infosys and massive selling across the IT pack, Sensex plunged over 1,000 points intraday to slip below the 67,000 mark while the Nifty50 closed below the 19,750 level.
The 30-share index closed the Friday session with a loss of 888 points, or 1.31%, at 66,684.26 while the broader Nifty50 settled below 234 points, or 1.17%, at 19,745. Owing to a sharp sell-off across the spectrum, investors lost nearly Rs 2 lakh crore as the overall market capitalisation of firms listed on BSE came down to about Rs 302.1 lakh crore on Friday from nearly Rs 304 lakh crore on Thursday.
Nifty50, at a high of 19,992 on Thursday, was expected to breach the 20,000 mark on Friday but a sharp cut in FY25 growth guidance by Infosys along with overnight selling in the tech-heavy NASDAQ (United States) proved to be too much for the bulls to continue the rally. Add to it, an average Q1 show by HUL and expectations that Reliance Industries on Friday will report a double-digit decline in Q1FY24 profit jittered investors’ sentiment.
Infosys (down 7.73%), Hindustan Unilever (down 3.60%), HCL Tech (down 3.17%), Wipro (down 3.05%), TCS (down 2.58%) and Reliance Industries (down 2.48%) ended as the top losers in the Nifty index. Among sectoral indexes, the IT index collapsed 4.09%.
“Overnight fall in tech-heavy Nasdaq triggered a wave of massive correction in local software stocks led by Infosys, which slashed the revenue growth guidance for the rest of the year due to sharp deterioration in discretionary spending by the clients,” said Amol Athawale, Vice President - Technical Research, Kotak Securities.
Athawale added that the record upsurge in the markets in such a quick time was already raising concerns of expensive valuations, and hence investors took this opportunity of weak US cues to prune their holdings, although India’s fundamentals remain on strong footing. Backed by billions of dollars of FPI inflows, Sensex and Nifty, had gained about 16% each from March lows. Since Nifty is trading about 20 times FY24 estimated earnings, there are concerns related to high valuations.
Ajit Mishra, SVP - Technical Research, Religare Broking, expect Nifty to spend some time around the current levels, to digest the recent surge and it would be healthy. Meanwhile, participants should focus more on risk management for the existing trades and prefer sectors that are showing resilience for fresh positions, added Mishra.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said that all eyes will be on the US Fed and ECB policy meeting next week. “Investors would also take cues from various macro data that would be released. With the result season picking up pace, we expect a lot of stock-specific action and provide direction to domestic equities in the coming week,” added Khemka.
Utkarsh shares list at 91.76% premium over IPO price
On expected lines, shares of Utkarsh Small Finance Bank are listed at a premium of 60% to Rs 40 apiece on the National Stock Exchange over their IPO price of Rs 25 apiece. Despite this massive listing gain, investors queued up to buy the stock as its shares ended at a premium of 91.76% over the IPO price, at Rs 47.94 apiece. Utkarsh’s maiden share sale, between July 12 and July 14, was subscribed 101.91 times by its final day. Anubhuti Mishra, equity research analyst at Swastika Investment Ltd, said, “After listing at such a level, we will suggest booking this gain; however, aggressive investors can choose to buy during any subsequent dip.”
