Nifty Snaps Eight-Week Losing Streak on IT Rebound

Indian equities experienced a broad rally on Friday, led by a significant rebound in information technology (IT) stocks, bringing an end to an eight-week losing streak for the benchmark Nifty 50 index. The Nifty 50 closed up 1.3 per cent at 22,520, while the Sensex gained 1.23 per cent to settle at 72,472.33. This positive movement saw 22 out of 23 sectoral indices on the NSE conclude the day in the green, with the Nifty IT index notably surging by 3 per cent. The Nifty 50 also registered a 0.44 per cent gain for the week, marking a crucial reversal after its longest losing streak since 2001, which had lasted nine weeks.

The market's turnaround was attributed to a pause in tensions between the US and Iran, coupled with optimistic quarterly results from TCS. This provided a much-needed boost, particularly after the previous day, Thursday, saw NSE-listed stocks suffer a substantial loss of ₹10 trillion in market value. On Friday, the market value of stocks across the NSE rebounded by approximately ₹4.59 trillion. G Chokkalingam, founder of Equinomics Research, noted that while TCS results offered confidence to IT stocks, the Nifty's rebound largely represented a short-term recovery driven by bargain buying.

Despite the widespread gains, the Nifty Oil & Gas index was the sole sectoral gauge to close lower, dipping 0.1 per cent to 10,345. Defensives also saw more muted gains, with Nifty Pharma and Nifty REITs & InvITs indices each rising 0.5 per cent, and the Nifty Chemicals index adding 0.6 per cent. Looking ahead, Gift Nifty October futures traded up 1.1 per cent at 22,605 in the evening, suggesting a firm start for the next trading week.

For ordinary savers and taxpayers, this market rebound signals a potential shift in sentiment after a prolonged period of declines. While it's not investment advice, the positive momentum in IT and broader equities could offer some relief to those holding diversified portfolios. However, underlying concerns such as oil prices and global geopolitical factors remain. Investors will closely monitor domestic CPI data expected on Monday for further indicators on the interest-rate trajectory, especially following the RBI's move towards calibrated tightening. The actual performance of Q2 earnings, anticipated to be strong year-on-year, will be vital in determining the sustainability of this market recovery, according to Vinod Nair, head of research at Geojit Investments.

What to watch: Domestic CPI data on Monday and Q2 earnings performance for sustained recovery cues.

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