IT Stocks Lift Sensex By 226 Pts; Broader Markets Continue To Bleed Red

A sharp rally in the technology and some banking stocks on Monday, August 23 led the benchmark indices to close higher amid volatility seen in the markets. The BSE Sensex closed higher by 226.47 points at 55,555.79, and the Nifty-50 index added 45.95 points to close at 16,496.45.

The 30-share pack Sensex ended the intraday session with 15 advances and equal declines. Shares of HCL Tech were the top gainer, adding over four per cent, while those of TCS and Bajaj Finserv gained over two per cent each. On the flipside, M&M and Bajaj Auto declined over two per cent to end in the red on Monday.

Sectorally, only IT, Banks and Financials ended in the green, while all other sectors witnessed volatility. The IT sector was the top performer gaining nearly two per cent as more than six stocks in the overall index hit their 52-week highs on Monday. Mindtree and HCL Tech were the top gainers advancing over four per cent each, while TCS was the top value contributor.

The Blue-chips are currently in the play in market and experts feel that large caps are likely to lead the rally in the upcoming sessions as the broader markets have corrected 6-8 per cent, mainly due to overvaluation. However, a next leg of up move can be expected in a week or two as the broader markets will arrest the ongoing correction.

"We expect broader market indices to maintain the aforementioned rhythm by arresting ongoing corrective phase in coming week or two and undergo base formation above 50 days EMA that would set the stage for next leg of up move," ICICI Securities said in a note.

Tracking the broader markets today, the BSE Smallcap index was the worst hit as it declined 1.5 per cent, and the BSE Midcap index dipped nearly one per cent in the day's trade. Capacite Infra was the top Smallcap loser, down nearly 20 per cent, while Ujjivan Finance and Sadbhav Engg fell 13-14 per cent each.

Moving ahead, experts suggest traders to refrain from taking new longs until the Nifty index posts a closing above the 16,550 level with higher than average volumes. If sustained above 16,500, we can expect 16,700 in the near term, said experts.

In the overall market breadth on Monday, 745 shares advanced, 2438 shares declined, and 135 shares were unchanged.

Ruchit Purohit

BW Reporters The author is a Trainee Journalist at BW Businessworld based in Mumbai. He tracks the Markets and related news.