Sectoral Snapshot Today: Nifty IT Jumps 2.9%, Auto, Metal, Financial Stocks Drag

Mumbai, October 21: Indian sectoral indices ended largely lower on Wednesday, with information technology stocks emerging as the key outperformers while financials, auto and metal stocks came under pressure. The Nifty IT index surged 2.9%, supported by optimism over quarterly earnings and expectations that a shift in global sentiment around artificial intelligence (AI) spending could benefit Indian technology services companies. However, elevated crude oil prices and broad-based selling weighed on overall market sentiment, dragging the benchmark Nifty 50 down 0.34% to 22,811.35.

IT Stocks Lead Sectoral Gainers

The Nifty IT index was the standout performer, rising 2.9% as investors responded to quarterly earnings and prospects for a potential re-rating of technology stocks. A global brokerage said steady earnings and changing global sentiment around AI-related capital expenditure could support valuations for some Indian IT companies.

L&T Technology Services led the gains, surging 10.5% after reporting higher revenue and profit for the September quarter. The company also expressed confidence in a stronger second half of the financial year, supported by an improving order backlog and large deal wins. Infosys (up 3.3%), Tech Mahindra (3.13%), Tata Consultancy Services (TCS, 2.8%) and HCL Technologies (3.2%) were also among the gainers on the Nifty.

Financial Stocks Under Pressure

Financial stocks were among the major drags on the market, with the Nifty Financial Services index declining 1.2%. Bajaj Finance fell 3.3% after flagging early signs of stress in its loans against gold, raising concerns about asset quality in a segment that has gained importance amid strong gold prices.

The weakness in financial stocks added to the pressure on the benchmarks, offsetting gains in IT shares. Investors remained cautious as they assessed quarterly results, lending trends and the outlook for credit quality.

Auto, Metal Stocks Decline

Auto and metal stocks also witnessed selling pressure, with the Nifty Auto index falling 1.5% and the Nifty Metal index declining 1.7%. The losses reflected the broader risk-off sentiment as investors weighed the implications of elevated crude oil prices and uncertainty surrounding the global economic outlook. Eicher Motors fell 2.4% despite a global broker raising earnings estimates for the two wheeler maker. Higher oil prices could raise input and transportation costs for companies while adding to inflationary pressures, potentially affecting margins and demand across sectors.

Vedanta group firm Hindustan Zinc rallied in early trade after more than doubling profit before ending 2.5% lower as a global broker reduced target price for the stock.

Crude Oil Prices Weigh On Broader Market

Brent crude futures rose 1.5% to trade above $110 per barrel amid concerns over supply disruptions in the Middle East and a drawdown in US crude inventories. Rising oil prices remain a concern for India, which imports most of its crude requirements, as they can increase the import bill, strain the fiscal deficit and weigh on corporate profitability.

Analysts said elevated Brent crude prices and US bond yields could keep markets under pressure in the near term, with investors continuing to sell into rallies.

Midcap, Smallcap Stocks Underperform

The weakness extended to broader markets, with the Nifty Smallcap index falling 2.4% and the Nifty Midcap index declining 1.6%. The underperformance highlighted investors’ preference for select large-cap stocks amid elevated macroeconomic risks and uncertainty over the direction of global markets.

With crude oil prices remaining high and selling pressure spreading across sectors, investors will continue to monitor quarterly earnings, global market cues and foreign fund flows for signs of a sustained recovery.

Source:

• NSE