IT shares buck weak market trend; TCS, Infosys up 1%

IT shares bucked weak market trend even as financial shares weakened on asset quality concerns

Benchmark share indices kicked off the new July F&O series on a sluggish note tracking weak Asian cues with China's benchmark Shanghai Composite witnessing a sharp sell-off. However, IT exporters bucked the weak market trend amid weakness in the rupee.

At 1PM, the 30-share Sensex was down 135 points at 27,760 and the 50-share Nifty was down 31 points 8,367.

The broader markets also pared early gains both the BSE Mid-cap and Small-cap indices were down 0.3-0.7% each.

The market breadth weakened further with 1,439 losers compared with 943 gainers on the BSE.

The Indian rupee continued to trade flat against the US dollar at 63.60 as gains in the US currency overseas capped upside gains.

Meanwhile, RBI Governor Raghuram Rajan has asked central banks from across the world to define "new rules of the game" as he warned that the global economy may be slipping into problems similar to the Great Depression of the 1930s.

GLOBAL MARKETS

Shares in China witnessed a sharp sell off to crash over 7% as regulatory vigilance on high risk margin trading while the uncertainty over Beijing's monetary policy stance also weighed on sentiment. Shares in Hong Kong also tracked weakness in the mainland. The Hang Seng was down nearly 2%. Further, Japan's benchmark index, the Nikkei ended down 0.3% while Straits Times was down 0.8%.

European shares also opened lower tracking the sharp sell-off in China while uncertainty of Greece concluding a deal with its creditors to avoid debt default also weighed on investor sentiment. The CAC-40, DAX and FTSE-100 were down 0.6-0.8% each.

SECTORS & STOCKS

BSE Bankex was the top sectoral loser down 1.6% followed by Capital Goods, Power and Realty indices. Gainers include IT and COnsumer Durables.

Financials witnessed selling after the Reserve Bank of India highlighted weakness in asset quality on the back of rising trend in stressed advances ratio of scheduled commercial banks (SCBs), especially of public sector banks (PSBs).

ICICI Bank, HDFC Bank, Axis Bank and SBI were down 0.7-1.6% each. Mortgage lender HDFC witnessed profit taking after gains in the previous session after the government announced the launch of Smart Cities and housing schemes.

Capital goods shares also witnessed profit taking after recent gains. L&T and BHEL eased 1.5-2.5% each.

Other Sensex losers include heavweights Reliance Industries and ITC along with Bharti Airtel.

However, IT majors bucked the weak market trend and are trading higher on the back of weakness in the rupee. Infosys, TCS and Wipro were up 0.7-1.5% each.

Among other shares, Cyient was trading higher by 2% after the information technology (IT) consulting & software firm said that Oppenheimer Funds, Inc. hiked its stake in the company through open market purchases.