SENSEX pares gains after 400-pt surge, NIFTY at 22,550; Bajaj Auto, BEL top gainers, Tech Mahindra falls 3%

The domestic stock market pared its early gains amid heightened volatility on Monday, October 12, after opening on a positive note.

The S&P BSE SENSEX surged over 400 points in early trade, while the NSE’s NIFTY50 climbed to an intraday high of 22,651.10, compared with its previous close of 22,520.45.

However, by 9:33 AM, the SENSEX had pared most of its gains, trading nearly flat at 72,484.33. The NIFTY50 was quoting at 22,551.90, up 31.45 points, or 0.14%.

How NIFTY50 stocks were faring

At 9:36 AM, 37 of the 50 NIFTY50 constituents were trading in the green, while the remaining 13 were in the red.

Bajaj Auto led the gainers, rising 3.46%, followed by Dr Reddy’s Laboratories, up 1.56%. BEL, Trent and Tata Steel were also among the top five gainers, advancing between 1.13% and 1.39%.

On the other hand, Tech Mahindra was the top loser on the index, falling 3.45%. Bharti Airtel, ITC, Axis Bank, and State Bank of India (SBI) were among the other notable laggards.

Expert View

Sharing the market outlook, Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a SEBI-registered Research Analyst firm, said Indian equities ended a volatile week modestly higher, as Friday’s rebound offset much of Thursday’s sharp decline.

The RBI’s 25-basis-point rate increase, elevated crude prices, high global bond yields and sustained foreign selling weighed on sentiment.

Domestic institutional investors provided a crucial counterweight, absorbing nearly the entire ₹30,000-crore weekly outflow from foreign institutional investors.

September CPI inflation will be the first major domestic test next week. A stronger-than-expected reading could revive concerns over further RBI tightening, putting rate-sensitive sectors such as banking, automobiles and real estate under pressure while raising the risk of a broader drag on consumer demand.

A softer print could ease concerns over the eventual peak in interest rates, but any relief may prove short-lived if Brent crude remains above $100 a barrel. Wholesale price inflation data will offer a further indication of how elevated energy and logistics costs are filtering through to producer prices.

U.S. inflation and retail-sales data will influence the direction of Treasury yields and the dollar. Stronger-than-expected readings could reinforce expectations of further Federal Reserve tightening, sustaining pressure on emerging-market currencies and foreign portfolio flows.

Conversely, softer inflation or signs of moderating consumer demand could pull yields lower and provide Indian equities with a firmer foundation for recovery than Friday’s short-covering bounce.

The expert added the IT sector will remain in focus as HCL Technologies, Wipro and Tech Mahindra report their September-quarter results.

"The sector staged a sharp rebound on Friday following TCS’s better-than-expected earnings, but whether the recovery gains traction will depend on the performance of its peers and their outlook for the coming quarters. Management commentary on US discretionary spending, deal conversions and margins will be key, alongside the potential implications of the PERM suspension. While the restriction does not affect existing H-1B employment, a prolonged freeze could increase localisation and employee-retention costs for Indian IT companies," Radhakrishnan added.

Market statistics

Market breadth on the NSE remained positive. Of the 3,188 stocks traded, 2,171 advanced, 896 declined and 121 remained unchanged, indicating that advances outnumbered declines.

Broader markets trade higher

Broader markets also traded in positive territory, with small-cap stocks outperforming their mid-cap peers.

The NIFTY Midcap 100 rose 0.39% to 59,018.50, while the NIFTY Smallcap 100 gained 1.20% to 19,383.35.