Indian Shares Rise as IT, Pharma Extend Gains on Soft US Inflation Data
BENGALURU – Indian blue-chip indexes experienced gains on Wednesday, driven by the strong performance of IT and pharma stocks on the back of soft U.S. inflation data. However, these gains were tempered by a lackluster showing from the financial sector.
The NSE Nifty 50 index rose 0.14% to close at 19,811.85 points, while the S&P BSE Sensex settled 0.14% higher at 66,023.24.
According to Jaykrishna Gandhi, head of business development of Institutional Equities at Emkay Global Financial Services, there is no need for major concerns regarding the Indian markets in the near term. Gandhi added that the Nifty 50 is likely to face resistance near the 19,800 level after the recent rally.
Since November 14, the Nifty has witnessed a 2% rise due to soft U.S. inflation data, which has led to increased speculation that the Federal Reserve will not raise interest rates further.
IT companies, which earn a significant portion of their revenue from the U.S., gained 6.3% over six sessions, with a 0.74% increase on the day.
Similarly, the pharma index rose by 0.63% on the day, bringing its total gains to 3.70% over six sessions. Macquarie noted on Tuesday that Indian pharma companies were in a sweet spot due to a turnaround in the U.S. generics market.
Among the top Nifty 50 gainers was Cipla.
Bharat Petroleum Corporation topped the Nifty gainers, adding 3.63% to its share price. The oil marketing company recently announced that it will consider declaring an interim dividend on November 29.
On the other hand, high-weightage financials, banks, private banks, and public sector banks experienced losses ranging from 0.2% to 1.2%, thus capping overall gains. Analysts attribute this weakness to the Reserve Bank of India’s decision to tighten rules for personal loans and credit cards.
Small-caps, which are more focused on the domestic market, fell 1.21%, in contrast to their recent outperformance over the Nifty 50. Meanwhile, mid-caps closed 0.34% higher.
Vinod Nair, head of research at Geojit Financial Services, stated that investors’ focus has shifted to the primary market, where a series of initial public offerings (IPOs) are scheduled for this week. This shift has resulted in some profit taking in the broader market.
In conclusion, Indian shares rode the wave of IT and pharma sector gains, fueled by softer U.S. inflation data. The financial sector’s performance lagged due to tightening regulations on personal loans and credit cards. Additionally, the small-cap market witnessed some profit taking as attention turned to upcoming IPOs. The outlook for Indian markets remains positive, driven by favorable global factors.
