Stock Market: Caution returns on street; recession fear holds back global rally
By S Jha
New Delhi, April 10: After a sharp rally, a phase of consolidation or pause is seen to be a normal behavior in the equity markets. Nifty gained over two per cent in just five days, which by convention is quite sharp rally. Yet, Nifty showed signs of confidence, rising by as much as over 90 points to give up most of the gains after profit booking kicked in.
Bank Nifty was under pressure throughout the trading session, pulling down the indices. Bank Nifty, an index of the top banks in the public and private spaces, have been a laggard ever since the monetary policy meeting of the Reserve Bank of India surprised the street by pressing the pause button. After effecting a 250 basis points rise in the Repo rate, the RBI finally heeded to the growing pressure to stop copying the US Federal Reserve.
The sign of confidence on the street was on account of the IT pack, which had been the most laggard along with realty in the last financial year. The IT scrips such as Wipro, TCS, Tech Mahindra and HCL Technology exhibited strength.
The IT stocks are stated to be oversold on the back of the recessionary sentiments in the US and Europe. But the sector, note the market participants, should not expect an early respite, for the indicators suggest that the US economy is still contracting, which may squeeze the IT spendings, affecting the Indian companies. Europe may stay in an extended phase of recession.
Tata Motors was the star of the day, rising at one point by over seven per cent on the back of the robust numbers of the Jaguar Land Rover (JLR), which is a competitor of Tesla in the electric car segments. The automobile behemoth, which has already emerged as the second largest car maker in India, is stated to be charting a roadmap to become debt free in the next few years. Tata Motors is also belting out several models at competitive prices to take on the Chinese and South Korean competitors. The scrip has been in a consolidation phase, trading between Rs 420 to Rs 470 level for a long time, and breakout is being watched out for the next phase of price action on the Tata Motors stock. Adani Group of companies, meanwhile, are doing well, with some of them locked in the upper circuits.
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