Market breadth turns negative; IT stocks rebound

Key equity benchmarks came off day's high and traded with small gains in mid-morning trade. Sentiment was dented by the Asian Development Bank (ADB) lowering India's growth forecast. IT stocks rebounded after posting losses for three consecutive sessions. The Nifty struggled to regain the crucial 11,900 mark.

At 11:25 IST, the barometer index, the S&P BSE Sensex, was up 96.75 points or 0.24% at 40,336.63. The Nifty 50 index was up 25.1 points or 0.21% at 11,881.90.

The broader market traded with minor gains. The S&P BSE Mid-Cap index was up 0.26%. The S&P BSE Small-Cap index was up 0.07%.

 

The market breadth turned negative. On the BSE, 916 shares rose and 1011 shares fell. A total of 159 shares were unchanged. In Nifty 50 index, 29 stocks advanced while 21 stocks declined.

Economy:

The Asian Development Bank (ADB) on Wednesday announced it trimmed its forecasts for economic growth in developing Asia this year and next year as growth in the People's Republic of China (PRC) and India is weighed down by both external and domestic factors.

India's growth is now seen at a slower 5.1% in fiscal year 2019 as the foundering of a major non-banking financial company in 2018 led to a rise in risk aversion in the financial sector and a credit crunch. Also, consumption was affected by slow job growth and rural distress aggravated by a poor harvest. Growth should pick up to 6.5% in fiscal year 2020 with supportive policies. In September, ADB forecast India's GDP to grow 6.5% in 2019 and 7.2% in 2020.

Buzzing Index:

The Nifty IT index was up 0.55% at 15,029.40, snapping three day losing streak. The index shed 2.74% in the past three days.

The recent sell off was triggered by the strength in domestic currency. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

NIIT Technology (up 1.81%), MindTree (up 0.83%), Tech Mahindra (up 0.79%), HCL Technologies (up 0.77%), Hexaware Technologies (up 0.63%), TCS (up 0.48%), Persistent Systems (up 0.47%), Oracle Financial Services Software (up 0.36%) and Zensar Technologies (up 0.28%) gained.

In the foreign exchange market, the rupee continued to edge higher against the dollar. The partially convertible rupee was hovering at 70.80, compared with its close of 70.925 during the previous trading session.

Stocks in Spotlight:

Jindal Steel & Power (JSPL) rose 1.67% to Rs 143.40 after the company said it commissioned its fourth coke oven battery at Angul steel plant in Odisha, making it self-sufficient in coke requirement.

Forbes & Company was down 0.73% after ICRA downgraded ratings on the company's long term fund-based limits from ICRA A to ICRA BBB+ with a negative outlook. The rating downgrade was on the back of weakening in financial profile of the parent company, Shapoorji Pallonji and Company and deterioration in the performance of engineering division

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