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Benchmark equity indices Sensex and Nifty erased early gains to trade lower on October 12 as IT shares declined after TCS stated that headwinds continue for the sector amid a sluggish economic climate.
The 30-share Sensex opened higher and rose further by 104 points to hit a high of 66,577.60 as banking, auto and metal shares advanced in line with positive global markets.
However, the gains were offset by losses in IT shares, dragging to the 30-share index down by 84.16 points or 0.13% to 66,388.89 at 9.50 a.m.
The broader Nifty also retreated from early highs to trade 23.70 points or 0.12% down at 19,787.65. It moved between a high of 19,843.30 and a low of 19,784.55 in morning trade.
Rate-sensitive stocks gained after the U.S. Federal Reserve’s meeting minutes released on October 11 suggested that the U.S. central bank would not raise interest rates in the near future amid uncertain economic conditions.
Among Sensex shares, IndusInd Bank, Axis Bank, SBI, Tata Motors, JSW Steel, ICICI Bank, Maruti, Tata Steel, and M&M advanced in early trade. However, the gains were negated by more than 1% fall in IT major TCS which emerged as leading Sensex loser.
The company has stated that the headwinds for the IT sector continue amid a sluggish economic climate. The country’s largest software exporter TCS on Wednesday reported an 8.7% increase in its September quarter net profit to ₹11,342 crore.
The Tata Group company also announced a ₹17,000-crore share buyback on top of committing a nearly ₹3,300-crore dividend payout.
Other IT stocks such as Tech Mahindra, Infosys and Wipro also declined. Losses in Reliance, HUL, L&T and Bharti Airtel also weighed on the benchmark index.
V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “There are positive developments that can strengthen the rally in the market.”
“Steadily declining trend in the dollar index and the U.S. bond yields, declining crude and sharp dip in FII selling in the cash market are big positives for the market. If the U.S. CPI inflation data expected tonight dips below 3.6% that will be a shot in the arm for the bulls.” Asian markets, including Japan, China and Hong Kong, were trading with gains following advances in the U.S. markets overnight.
The Hang Seng in Hong Kong advanced 1.75%, Nikkei 225 in Japan gained 1.48% while South Korea’s Kospi was up 0.93%.
On the domestic front, Sensex had spurted by 393.69 points or 0.6% to close at 66,473.05 while Nifty climbed 121.50 points or 0.62% to settle at 19,811.35 on Wednesday.
Foreign Institutional Investors (FIIs) continued to be net sellers as they offloaded shares worth ₹421.77 crore on Wednesday, according to data available with the Bombay Stock Exchange.
