Fuelled by Rs 10,000 crore inflows by the FIIs, which are on a short-covering spree, Nifty went up around 5% in eight days. But the hurdle at 17,800 level made bulls tired after the non-stop rally.
“It is a natural correction that we are seeing in the market today. We were in a slightly overbought condition. Also, traders want to play safe ahead of the 3-day holiday,” said Mumbai-based trader Manish Shah.
The biggest trigger for the pause was the downside in IT stocks after bellwether Tata Consultancy Services (TCS) missed estimates both on the revenue and profit front in its March quarter earnings.
“Rising caution among clients across several verticals in Europe and North America, 3-year low book-to-bill ratio and subdued headcount additions point to a marked slowdown in FY24,” Jefferies said.
TCS and Infosys, which is slated to announce its Q4 numbers today, were trading 2-3% lower and were the biggest drags on Nifty.
Nifty IT index was down around 2.5% and was the biggest sectoral loser as investors didn’t spare any of the IT stocks.Yesterday’s inflation data, both from the US and India, are positive from investors’ perspective. The US consumer inflation number has come lower than expected at 0.1% MoM and 5% YoY. CPI inflation print in India declining to 5.66% is an endorsement of the MPC’s pause decision.
“So, the MPC continuing with the present rates in the next policy meeting is a clear possibility. This is positive for equity markets,” said Dr V K Vijayakumar of Geojit Financial Services.
As the other big boys of Dalal Street declare their quarterly numbers in the next few days, analysts say stock-specific action would dominate the market trend.
“Consensus expectations are building double-digit earnings growth for Nifty50 companies ex of energy and metals. Earnings growth is expected to be stronger for domestic sectors including banks, automobiles and industrials. Margins are also expected to improve on the back of easing input prices,” said Shibani Sircar Kurian of Kotak Mahindra AMC.
Going forward, top-down macro factors would be one of the focus areas for the market participants.
With global macro uncertainties on growth and inflation persisting, it is likely that domestic equity markets remain volatile in the near term even as the medium-term outlook remains strong, she said.
Dalal Street bulls are hoping that the new fiscal year will be much better for equity markets than the previous one.
“The cost of equity could come down globally by the end of this year which will mean more inflows into the equity markets across the world, which would be a significant positive for the Indian equity market,” said Naveen Kulkarni of Axis Securities.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
