Sensex gains 254 pts

The markets witnessed broad-based buying on Wednesday for the third consecutive session as they tracked positive global cues. The midcap and smallcap stocks outperformed the benchmarks. The Nifty rose 76.4 points (0.51%) to close at 15,174.8 while the Sensex gained 254.03 points (0.50%) to 51,279.51. On the other hand, Nifty Midcap 100 and Nifty Smallcap100 rose by 0.82% and 1.39%, respectively.

So far this month, the broader markets have marginally underperformed the benchmarks. The Nifty Midcap 100 and Nifty Smallcap 100 rose by 2.26% and 2.71%, respectively, while the Nifty has been up by 2.8%.

G Chokkalingam, chief investment officer, Equinomics Research and Advisory, said: “The stocks may have underperformed because of the stretched valuations, but this underperformance is unlikely to continue. This is because there is not much steam left in the benchmarks…”

On Wednesday, the markets rose because of buying in IT stocks, mirroring the gains made by such stocks on the Nasdaq overnight. The Nifty IT jumped 1.67% during the session. Brokerages such as ICICI Securities have cautioned investors on the valuations of IT stocks. ICICI Securities said, “Despite the recent correction and under-performance, multiples still remain bloated and higher than global tech in many cases, notwithstanding inferior growth. Even as broader markets re-rated due to lower rates, the growth to re-rating asymmetry is more alarming in IT. Despite consensus keeping FY21-23E revenue CAGR constant or lower (vs pre-Covid), re-rating was led by a disproportionate rise in estimates – narrowing spreads further.”

The biggest gainers on the Nifty were Eicher Motors, JSW Steel, Hindalco, Tata Steel and Bajaj Finance with gains of 3.1%, 3%, 2.3%, 2.31%, and 2.27%. The biggest losers were SBI Life, ONGC, IOC, HDFC Life and Kotak Mahindra Bank, down by 3.48%, 1.84%, 1.54%, 1.5%, and 0.81%.

Foreign portfolio investors withdrew $2 million from the equity markets on Wednesday.