Nifty firm but off highs. IT stocks in focus. Key market levels to watch today

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Indian stock markets rose sharply today after four sessions of falls. Buying was broad-based with pharma stocks leading the recovery. Investors waited for the start of September-quarter earnings season and RBI policy decision later this week. The Sensex was up 600 points at 59,381 after rising as much as 783 points at day’s high. The broader Nifty50 index was firm above 17,700. 

Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments, said, “The Nifty has respected the 17400-17450 support and bounced smartly this morning. What needs to be seen is if we can manage to close above the 17600-17700 levels as that would resume the current uptrend. This move should then take the Nifty higher to levels closer to 18000 and beyond.” 

“Until we do not break 17400 on a closing basis, the overall trend of the market continues to remain bullish and dips can be utilized to enter long positions,” he added. 

Among the sectors, the Nifty pharma index was up 2%, lifted by 10% surge in Divis Lab. The Nifty IT index rose 0.75% with TCS up 0.9%. IT firm Tata Consultancy services will report its quarterly results on Friday, kick starting the September-quarter earnings season in India.

Asian markets were mixed on Monday, with Hong Kong’s benchmark down more than 2% after troubled property developer China Evergrande’s shares were suspended from trading.

Evergrande is struggling to make payments on more than $300 billion of debt as it endures a cash crunch brought on by a tightening of Chinese government restrictions on debt-leveraged financing.

“The dollar index slipping to 94.05 and the US 10-year yield slipping below 1.5 percent can be interpreted as indicative of return of risk-on in equity markets. But news from China can turn out to be a drag. China is trying to limit the damage to its real estate sector without bailing out Evergrande. An inevitable consequence will be a slowdown of the Chinese economy which will have implications for commodity prices and currencies of commodity exporters,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“Back home, India’s exports are booming and are inline to touch the $400 billion mark in FY22. However, the surge in the trade deficit is weakening the INR. The IT segment is likely to be back in focus. Commodities, particularly metals, may come under pressure,” he added.  (With Agency Inputs)

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