Heavyweight stocks drive Sensex, Nifty up; largecaps likely to support further rally

Benchmark indices Sensex and Nifty continued its bull run on March 22 afternoon, gaining up to 0.3 percent, supported by gains in largecap stocks as financial year 2023-24 nears an end. While volatility is likely to persist in the near-term due to 'froth' worries in mid-and smallcaps; analysts expect Nifty to trade with a positive bias going ahead and gradually head towards 22,200-mark.

Sensex was up 190 points to end at 72,831, while Nifty was up 72 points to settle at 22,084 on March 22. About 2,288 shares advanced, 1,049 shares declined, and 102 shares were unchanged.

Analysts at ICICI Securities suggested investors to accumulate quality stocks going ahead as strong support is placed at 21,700 for Nifty. "Structurally, we believe that the ongoing consolidation would set the stage for next leg of up move. In the process, we expect largecaps to relatively outperform the broader market," they added.

Ajit Mishra, Senior Vice-President of Technical Research at Religare Broking, too, believes to see some consolidation and said that the Nifty's sustainability above 22,200-mark could bring some meaningful recovery. "Market participants should stay stock-specific until we see clarity over the next directional move. They can stick with index majors or large midcaps," he suggested.

Meanwhile, broader markets traded in a positive territory on March 22 as Nifty Midcap 100 and Nifty Smallcap 100 indices gained up to 0.6 percent. Fear gauge India VIX cooled by 2 percent to trade around 12 level.

Barring Nifty IT index, all sectors swam in the sea of green. Nifty IT was the worst sectoral performer to slip over 2 percent after Accenture lowered its full-year revenue growth within the range of 1 percent to 3 percent, compared to its earlier projection of 2 percent to 5 percent.

Following this, analysts at CLSA maintained a cautious stance on IT sector and said that the sector remained in an earnings downgrade cycle. They reiterated their 'sell' call on Wipro, HCL Tech, TCS, and LTIMindtree.

On the other hand, Nifty Auto and Nifty Realty indices were the top sectoral performers on March 22.

Having said that, the upcoming week will be holiday truncated for markets as India will celebrate Holi festival on March 25 and Good Friday on March 29. With no major domestic triggers lined up next week, markets are likely to react to global news development.

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