Nifty50 reclaims 11,000 levels. Will the up move sustain?
The Nifty50 index reclaimed 11,000 levels in intra-day trade on Wednesday, a feat it last achieved on October 1, 2018.
 "Nifty50 reclaims 11,000 levels. Will the up move sustain?")
premium
The Nifty50 index reclaimed 11,000 levels in intra-day trade on Wednesday, a feat it last achieved on October 1, 2018. The recent rally has been on account of positive news-flow and better-than-expected financial performance in a handful of stocks that comprise the index.
Sector-wise, stocks from the information technology (IT), private banks and select non-bank finance companies, besides heavyweights Reliance Industries, Larsen & Toubro (L&T), Hindustan Unilever (HUL) have been the major contributors.
Since October 2018 when the index hit the 11,000 level, RIL, Titan Company, L&T, HUL have moved up in the range of 4.5 per cent to 31 per cent till February 5, ACE Equity data show. Axis Bank, Kotak Mahindra Bank, ICICI Bank, State Bank of India (SBI), HDFC Bank, Bajaj Finance and Bajaj Finserv from the financial space; Wipro and Infosys from the IT sector have been among the top gainers.
On the other hand, Sun Pharma, Vedanta, Grasim, Indiabulls Housing Finance, JSW Steel, Tata Motors, Cipla and Coal India have been among the top losers during this period, slipping 20 per cent to 36 per cent, data show.
“The rally in the Nifty50 index has been on account of short-covering. There was a lot of Call writing at the 11,000 level (Nifty) and even now, maximum Call open interest (OI) of around 37-lakh contracts was seen at the 11,000 strike price. Till the position gets squared-off the index will not fall below the 11,000 mark. That said, the overall market breadth still remains weak as only a handful of stocks have led the up move,” said A K Prabhakar, head of research at IDBI Capital.
Investing strategy
Most analysts remain bullish on the road ahead for the IT sector and say it could be a safe-haven bet in the backdrop of volatility arising due to the upcoming general elections. On the fundamental front, industry body Nasscom has projected exports of IT services to grow at 7 – 9 per cent for 2018-19, almost the same as the previous fiscal year, but expects domestic revenue to grow faster at 10-12 per cent.
During the recently concluded quarter, digital businesses of most companies maintained their robust trajectories, and momentum could accelerate as they shift to the enterprise-wide implementation stage from the testing and proof-of-concept stages, analysts say.
"We rate the sector overweight. We prefer large cap IT companies over mid-IT companies mainly due to valuation comfort and growth guidance of the large companies going ahead. Most IT companies posted constant currency (CC) growth for Q3 in line with consensus expectations despite a seasonally weak quarter. Among the large-caps, Maruti Suzuki, Mahindra & Mahindra, ITC, RIL, HDFC Bank, ICICI Bank, TCS, Infosys, Cipla and L&T are among the top picks," analysts at Standard Chartered said in a recent report.
Going ahead, analysts at Motilal Oswal Research expect the markets to remain volatile at least till the general election outcome is known. ICICI Bank, Axis Bank, Titan, Maruti, HUL, Infosys, L&T, HDFC and SBI are their top bets in the large-cap universe.
| Company Name | NDP_Date | NDP_Close | Change (%) * |
| Titan Company Ltd. | 05-Feb-2019 | 1066.70 | 31.73202 |
| Axis Bank Ltd. | 05-Feb-2019 | 729.50 | 22.92527 |
| UPL Ltd. | 05-Feb-2019 | 795.95 | 19.58383 |
| Bajaj Finance Ltd. | 05-Feb-2019 | 2603.60 | 17.88997 |
| Kotak Mahindra Bank Ltd. | 05-Feb-2019 | 1279.15 | 14.00624 |
| Asian Paints Ltd. | 05-Feb-2019 | 1450.35 | 13.3263 |
| Dr. Reddys Laboratories Ltd. | 05-Feb-2019 | 2821.45 | 12.4711 |
| ICICI Bank Ltd. | 05-Feb-2019 | 352.65 | 12.30892 |
| Wipro Ltd. | 05-Feb-2019 | 368.45 | 11.60079 |
| Hindustan Unilever Ltd. | 05-Feb-2019 | 1821.45 | 10.90848 |
| Housing Development Finance Corporation Ltd. | 05-Feb-2019 | 1981.40 | 9.690813 |
| Bharti Infratel Ltd. | 05-Feb-2019 | 288.90 | 7.959641 |
| Reliance Industries Ltd. | 05-Feb-2019 | 1291.55 | 4.859138 |
| Larsen & Toubro Ltd. | 05-Feb-2019 | 1304.60 | 4.526881 |
| State Bank Of India | 05-Feb-2019 | 284.65 | 3.943765 |
| HDFC Bank Ltd. | 05-Feb-2019 | 2114.05 | 3.861554 |
| Adani Ports and Special Economic Zone Ltd. | 05-Feb-2019 | 339.80 | 2.860602 |
| Bajaj Finserv Ltd. | 05-Feb-2019 | 6017.10 | 2.299447 |
| Infosys Ltd. | 05-Feb-2019 | 754.85 | 1.098239 |
| * Change since October 01, 2018 | |||
| Source: ACE Equity |
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%