Bank Nifty, IT Stocks Have Scope For Improvement, Say Analysts
Indian benchmark equity indices ended higher on Tuesday, with shares of information technology companies contributing the most to gains.
The equity markets have been resilient in Tuesday’s trading session, according to analysts.
"The Nifty 50 has been very resilient at the lower end, with IT being the current flavour," Kunal Shah, senior technical and derivative analyst at LKT Securities Ltd., told NDTV Profit.
As the Nifty 50 did not break the support level at 21,650\21,700, Shah expected a strong upward move further towards the target of 22,200. "If this is taken out decisively, then we can even expect it to reach 22,600 in the very short term.”
Indian benchmark equity indices ended higher on Tuesday, with shares of information technology companies contributing the most to gains. The NSE Nifty 50 closed 157.7 points, or 0.72%, higher at 21,929.4, while the S&P BSE Sensex rose 454.67 points, or 0.63%, to close at 72,186.09.
The Bank Nifty has major scope for improvement, with 46,500 being the immediate resistance level, said Shah. Once the Bank Nifty surpasses these values, we can expect a rally, he said. He recommended going aggressive on the Nifty 50 but taking a wait-and-watch approach on the Bank Nifty before making a move in that sector.
According to Dharmesh Kant, head of equity research at Chola Securities Ltd., markets are steady and are experiencing sectoral play due to third quarter earnings.
“The quarter-three earnings have played out very well for many companies. The earnings for many companies outside the Nifty 50, which I am tracking, currently have 40% profitability growth,” he said.
In terms of the IT sector, Kant said that the earnings from mid-cap IT stocks were good. KPIT Technologies Ltd., Birlasoft Ltd. and Mastek Ltd. are a few mid-cap IT stocks that have reported good numbers and they are expected to continue showing growth, he said.
In the large-cap IT space, there was no negative news, he said. "The body language of the management committee suggested that the worst is over," according to him. The market is giving the benefit of doubt, because of which some buying is happening, Kant said.
Liquidity is another factor that is leading to the market surge, he said. "There are no sellers in the market. Even profit-takers are not there. Except for some nimble traders, investors are staying put. And additional money is just driving the markets crazy up there."
