Sensex Falls 500 Points; IT Stocks Outperform Owing to Weaker Rupee

Tue, 8 Mar 01:30 pm

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After trading on a flat note in the first half, share markets in India came under pressure in afternoon deals and are presently trading 1% lower.

In early trade today, both Sensex and Nifty briefly turned positive on cues that the ruling Bharatiya Janata Party (BJP) might retain control of India's most populous state, Uttar Pradesh.

Benchmark indices are currently trading lower amid volatility as investors remained concerned over the impact of Russia-Ukraine war on crude oil and other commodity prices.

Selling pressure could also be attributed to global research and brokerage house Credit Suisse downgrading Indian equities from 'overweight' to 'underweight' citing soaring oil prices.

Note that the faster-than-expected rise in interest rates by the US Fed has shook the global financial markets. The recent geopolitical conflict between Russia and Ukraine have sent commodity prices soaring with Brent crude oil prices hitting a 14-year high of US$140 a barrel.

The Dow Jones is now in a correction mode (down 10% from the peak) while the tech heavy Nasdaq in a bear market (down 20% from highs).

With today's fall, the BSE Sensex lost the psychological mark of 58,000 while the NSE Nifty was trading below 17,300 levels.

Presently, the BSE Sensex is trading down by 461 points, down 0.9%. Meanwhile, the NSE Nifty is trading down by 157 points.

The selling is seen across major sectors, particularly in the metal, oil & gas and automobile stocks.

The fall on broader markets is less severe. The BSE Midcap index is down 0.5%, while the BSE Smallcap index is down 0.2%.

Axis Bank and Maruti Suzuki are among the top losers today, down 3%.

SBI, Tata Steel, Asian Paints and HDFC are the other major losers, down over 2% each.

In a weak market, IT sector stocks rallied owing to a sharp depreciation in Indian Rupee versus the US dollar.

IT stocks, who make most of their revenues servicing clients in US tend to benefit from a weaker rupee.

Tata Consultancy Services (TCS), Mindtree and L&T Technology Services (LTTS) are up 3% each, while Infosys, Tech Mahindra and L&T Infotech gained 2%.

Meanwhile, sugar stocks are also in demand, rallying up to 18%. According to reports, with a favourable mix of ethanol towards B-heavy/juice coupled with higher sugar realisations, operating margins of sugar companies are expected to improve.

Natco Pharma share price rallied 9% today after the company launched its first generic version of Revlimid (Lenalidomide capsules) in 5 mg, 10 mg, 15 mg, and 25 mg strengths in the US market.

In his latest video, India's #1 trader Vijay Bhambwani explains whether you should worry about Russia selling its gold.

Can the price of gold crash due to Russian selling pressure? And should you worry about it?

Vijay answers these questions in the below video. Tune in to find out more...

More details to follow in the upcoming commentary.

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