In early trading on Wednesday, benchmark stock market indices staged a recovery, bouncing back after a significant slump in the previous session. The market’s positive momentum was largely driven by strong gains in information technology (IT) stocks, which provided a much-needed boost to investor sentiment.
By 9:26 AM, the S&P BSE Sensex was up 246.41 points, reaching 76,084.77, while the NSE Nifty50 added 62.15 points to stand at 23,086.80. Despite a sharp drop in the prior session, investors appeared to be looking past the recent market volatility and embracing a more optimistic outlook, particularly in the IT sector.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, weighed in on the market’s performance, noting that recent announcements by former President Donald Trump, which included threats to impose hefty tariffs on BRICS nations, had contributed to heightened market uncertainty. According to Vijayakumar, Trump’s tough rhetoric appears to have caused excessive alarm among market participants. His warning to impose 100% tariffs on BRICS countries if they pursue dedollarisation seems to be an echo of his campaign promises, which the markets may have interpreted as more threatening than they were intended.
One of the standout features of today’s early gains was the decline in the India VIX index, a barometer of market volatility, which had surged dramatically during the previous session. As of Wednesday morning, the index settled lower, reflecting a slight reduction in market anxiety. The VIX gained 0.42%, indicating some stabilization.
Despite the overall rebound, there were notable declines in broader market indices. Both the Nifty Smallcap100 and Nifty Midcap100 indices saw losses, falling by 1.92% and 1.72% respectively, as investor focus remained concentrated on large-cap stocks. The real estate sector suffered the most significant losses, plummeting by 3.36%, highlighting ongoing struggles in the sector.
On a positive note, two sectoral indices – FMCG and IT – stood out, recording modest gains. The Nifty IT index surged by 0.87%, fueled by strong performances from key IT stocks. Wipro led the sector with a gain of 2.11%, followed by Infosys, which rose 1.58%. Tata Consultancy Services (TCS) was also up by 1.42%, while Tech Mahindra saw a 0.95% increase. Other major IT players, including Coforge and HCL Technologies, also posted moderate gains. Mphasis, while still in positive territory, saw a modest uptick of 0.08%.
However, not all IT stocks enjoyed a smooth ride. Persistent Systems faced significant pressure, dropping by 5.77%, while L&T Technology Services fell 0.90%. LTI Mindtree also registered a decline of 0.52%, contributing to mixed performances within the sector.
Dr. Vijayakumar offered a broader perspective on the market, stating that the current correction, which has seen the Nifty fall approximately 12% from its September highs, presents a unique opportunity for long-term investors. According to him, the recent dip has brought stock prices closer to fair valuations, making it a favorable environment for investors to buy quality stocks. However, he cautioned that the key to success in such a market would be patience, as the market could still experience volatility before finding stability.
As the trading session progresses, market participants will closely watch the performance of large-cap stocks, particularly in the IT sector, as they continue to drive the market’s recovery. With geopolitical risks and economic uncertainties still looming, investors are likely to remain cautious, yet the rebound in IT stocks provides a glimmer of hope for a market recovery in the near term.
