Sector Watch: IT Jumps as Softer US Jobs Data Cools Rate-hike Fears; Pharma, Metals Join Rally

Mumbai, July 3: Indian equities witnessed buying across information technology, pharmaceutical and metal stocks on Friday as a softer-than-expected U.S. jobs report boosted hopes that the Federal Reserve may not hike rates later this year as previously expected. The improvement in global risk appetite, coupled with easing crude oil prices, helped investors return to export-oriented and cyclical sectors, while stock-specific disappointments weighed.  

The Nifty IT, Pharma and Metal indices were among the top-performing sectoral gauges, while PSU banks and energy stocks ended in negative territory. Realty stocks also attracted strong buying interest on hopes that a softer global rate environment could eventually support domestic demand. 

IT stocks rise ahead of earnings 

Nifty IT rose as tech companies climbed on a cooler-than-expected U.S. jobs report. Source: NSE 

The Nifty IT index climbed 1.8%, emerging as one of the day’s best-performing major sectors. Although the index remains down 6.6% over a month, Friday’s rally reflected bargain hunting ahead of the June-quarter earnings season and improving sentiment towards export-focused software companies.  

Technology companies derive a significant portion of their revenue from the U.S., making the sector particularly sensitive to changes in Federal Reserve policy. Softer U.S. labour market data reduced concerns that the Fed would raise rates later this year, improving the outlook for discretionary technology spending by global clients.  

HCL Technologies surged 5.7% after announcing a $1.14-billion AI-led digital transformation deal with a European client. The order win reinforced optimism over large deal pipelines. 

Other frontline IT names also participated in the rally. Infosys, Tata Consultancy Services, Wipro and Tech Mahindra advanced as investors accumulated quality software exporters ahead of earnings. 

Pharma sees strong buying 

Pharmaceutical stocks also witnessed strong buying interest, with the Nifty Pharma index rising 1.7%. 

Zydus Lifesciences climbed to a one-year high during intraday after partnering with Apollo Hospitals to launch its Shield blood-based multi-cancer detection test in India, strengthening sentiment around the stock. Piramal Pharma gained over 4%.  

The broader pharma pack benefited from its defensive characteristics amid an uncertain global economic backdrop, with investors rotating into healthcare names alongside technology stocks.  

Metal stocks gain on improving risk appetite 

Metal shares joined the rally as improving global sentiment encouraged investors to add exposure to cyclical sectors. 

The Nifty Metal index rose 0.8%, with Adani Enterprises recovering from early losses to end higher after increasing the size of its qualified institutional placement (QIP) to Rs 15,000 crore following strong institutional demand. National Aluminium Company rose 4.7%.  

Tata Steel, JSW Steel and Hindalco Industries were also among gainers. Lower crude oil prices also supported sentiment by easing concerns over input costs, while hopes of easier global monetary policy improved the demand outlook for industrial commodities.  

Realty shines; state banks under pressure 

Real estate stocks outperformed the broader market, their index rising 2.2% and emerging as the strongest performer during the session as investors bet that an easing global interest-rate environment could eventually prove supportive for property demand. 

In contrast, banking shares remained subdued. 

Nifty Financial Services ended flat even as Bajaj Finance rose on strong Q1 business update. Source: NSE  

The Nifty PSU Bank index ended as the biggest laggard. Union Bank of India fell 3.7% as its Q1 business update lagged peers. Bank of Baroda declined 2.8% as investor sentiment remained subdued following the lender’s $600 million (around Rs 5,700 crore) settlement in the long-running NMC Health litigation. Punjab National Bank declined 1.5% after Q1 business update showed a 12.8% year-on-year rise in global advances.  

Weakness in banking stocks capped the benchmarks’ overall gains despite the rally in technology and healthcare names. Bajaj Finance rose 1.3% after a strong Q1 business update showed new loans booked grew 20% year-on-year.  

Energy stocks also remained under pressure amid stock-specific selling. 

While most sectors ended in positive territory, some companies struggled. 

Avenue Supermarts, which operates the DMart retail chain, slumped after its June-quarter business update fell short of investor expectations.  

PB Fintech, the parent of Policybazaar, dropped after a block deal weighed on investor sentiment.  

Source

•  NSE