Gains in IT stocks, Brexit agreement hope push markets further up

The benchmark indices gained for the second straight day on Wednesday, after starting the week with the biggest single-day loss in seven months.  Gains in IT stocks, the reopening of trade and transport links between the UK and France, and the possibility of a Brexit agreement cheered investors.

The gains in the indices were led by IT majors Infosys and TCS.  Infosys on Tuesday in an exchange filing said it had won a multi-year deal from German automotive major Daimler for an IT infrastructure transformation. Wipro shares rose close 6 per cent on Wednesday after the company announced a $700-million deal with German food wholesaler Metro AG for five years to provide IT services.

"The market is continuing its rally — amid concerns over the new virus strain, lockdowns and weak global cues — fuelled by IT stocks, mid- and small-caps.  In the coming days, the focus will be on Brexit trade deals which are expected to be finalised soon and the impact on the economy due to a strict lockdown in the UK," said Vinod Nair, head of research, Geojit Financial Services.

On Wednesday, France reopened its borders with the UK to travellers and truck drivers who tested negative for Covid-19. France had closed the route for 48 hours to prepare measures against the new strain of coronavirus virus. On Tuesday, EU chief negotiator Michel Barnier said the bloc is giving a "final push" to reach a potential deal on future trading ties with the UK. 

However,  US President Donald Trump's threat of not signing the coronavirus relief Bill worried investors. Trump demanded the lawmakers increase the stimulus checks due to go out to most Americans to $2,000, from $600.  

“The Indian markets are taking comfort from global markets, which are holding strong despite the renewed Covid challenge. We suggest continuing with a cautious stance and limiting leveraged positions. The defensive pack is doing well on expected lines and likely to maintain this bias ahead as well," said Ajit Mishra, VP-research, Religare Broking.