Sectoral View: Financials Shine as IT Slumps on IBM Outlook

Mumbai, July 15: Financials emerged as the biggest support for the benchmark indices, while information technology, metals and FMCG stocks remained under pressure. Gains in banking and insurance shares helped the Nifty end in positive territory despite persistent concerns over rising crude oil prices and escalating US-Iran hostilities.  

Financials Rebound 

Financial stocks staged a strong recovery after declining 1.1% in the previous session. The Nifty Financial Services index climbed 0.6%, while the Nifty Bank index gained 0.5% and the Nifty Private Bank index rose 0.3%. Public sector lenders outperformed, with the Nifty PSU Bank index advancing 1%. 

Nifty Financial Services staged an impressive rebound after logging losses yesterday. Source: NSE 

Insurance stocks led the gains within the financial pack. ICICI Prudential Life Insurance surged 3.8% after reporting a rise in June-quarter profit. HDFC Life Insurance gained 2.4%, while ICICI Lombard General Insurance and HDB Financial Services rose 1.5% each ahead of their June-quarter earnings announcements later in the day. 

The rebound in financials proved crucial for the broader market, offsetting weakness across several other sectors and preventing the Nifty from slipping into negative territory. 

Capital Goods, Consumer Durables Gain 

Capital goods stocks attracted buying interest as investors remained optimistic about sustained infrastructure spending and healthy order inflows.  

Consumer durable shares also rose, supported by expectations of resilient domestic consumption. 

Kalyan Jewellers India, for example, extended rally for a sixth consecutive session on Wednesday, taking their cumulative gains to more than 53% during the period. Investor sentiment remained buoyant after the jewellery retailer reported a strong June-quarter business update, driven by healthy festive and wedding demand, and announced an aggressive store expansion plan. 

Another consumer durable stock Dixon Technologies (India) gained after a brokerage reiterated its ‘Outperform’ rating and raised its target price to Rs 16,000 from Rs 15,000, citing multiple growth drivers that could potentially triple the company’s earnings by FY29/FY30.  

The brokerage said the recently approved Vivo joint venture remains Dixon’s biggest near-term growth catalyst, with additional upside expected from the proposed PLI 2.0 scheme, expansion into industrial EMS, automotive electronics, IT hardware manufacturing and data centre hardware through its partnership with Inventec. 

Oil & gas stocks traded higher. However, analysts cautioned that sustained gains in oil prices could eventually weigh on corporate earnings and India’s macroeconomic outlook as the country imports the bulk of its crude oil requirements.  

IT Stocks Dragged Lower by IBM’s Weak Outlook 

The Nifty IT index declined 0.7%, making it one of the weakest-performing sectoral gauges after global technology giant IBM forecast second-quarter revenue below Wall Street estimates. 

Nifty IT index fell after IBM upset stocks with its disappointing outlook. Source: NSE 

IBM’s cautious outlook fuelled concerns that enterprise customers are increasingly prioritising spending on AI infrastructure—including servers, networking equipment and semiconductors—while delaying investments in software and IT services. The company also disclosed that several large customer contracts expected to close during the June quarter were deferred, reinforcing concerns over a slower enterprise technology spending environment. 

The disappointing guidance weighed on Indian IT exporters, as investors reassessed the demand outlook ahead of the domestic earnings season. 

TCS flatlined while Infosys fell. Wipro declined along with LTM. 

Among individual stocks, Tata Elxsi fell 4.8% after concerns over margins and downward revisions to FY27 earnings estimates dampened sentiment.  

Metals, FMCG Remain Under Pressure 

Metal stocks continued to face selling pressure amid worries over global demand and uncertainty surrounding the economic impact of the escalating conflict in the Middle East. Rising crude oil prices also raised concerns about inflationary pressures, which could weigh on industrial activity. 

FMCG shares also traded lower as investors booked profits after the sector’s recent outperformance, making consumer staples another drag on the benchmark indices. 

Broader Markets Outperform 

Despite weakness in export-oriented sectors, the broader market remained resilient. Midcap and smallcap indices outperformed the benchmark indices, reflecting continued investor interest in domestic growth stories and stock-specific opportunities. 

Analysts said financials are likely to remain in focus as the June-quarter earnings season gathers pace, while developments in the US-Iran conflict, crude oil prices and global technology spending trends will continue to influence sectoral performance in the near term. 

Source

•  NSE