Nifty IT Jumps 3.9% as TCS and Infosys Lift Sensex 414 Points for a Second Day of Gains

Strip out the software sector and Friday's session on Dalal Street looks very ordinary. The Nifty IT index rose 3.92% to 31,924.10, and that one sector supplied most of the push that took the benchmarks higher for a second straight day.

The BSE Sensex ended 413.66 points, or 0.56%, higher at 74,729.27 after touching an intraday high of 74,778.78. The NSE Nifty 50 added 148.80 points, or 0.65%, to settle at 23,146.15. Over Thursday and Friday together, the Sensex has now recovered 1,947 points and the Nifty about 523 points from Wednesday's close.

Software heavyweights did the heavy lifting

The rally started with Tech Mahindra, which climbed close to 8% to about Rs 1,780 as investors continued to react to its September-quarter numbers and its first bonus issue in more than a decade. But the more important development for the index was that the buying spread to the largest names in the sector. Tata Consultancy Services gained 4.82% to Rs 2,468 and Infosys rose 4.61% to Rs 1,162.20. Because both carry large weights in the Sensex and Nifty, their moves alone accounted for a big share of the day's index gain. HCL Technologies and Wipro also ended firmly higher.

The sector had been heavily sold through September on worries over slowing US technology budgets. The latest results have not been uniformly strong, but they have been less bad than feared, and that has been enough to trigger a round of short covering and fresh buying in the large-cap names.

Beneath the surface, a thinner rally

The broader market told a different story. The Nifty Midcap 100 slipped 0.11% and the Nifty Smallcap 100 ended almost flat, down 0.01%. Sectoral indices closed mixed, with metal, media and auto names seeing some buying while oil and gas stocks lagged. Reliance Industries gave up part of its sharp gain from the previous session, and insurers such as HDFC Life and SBI Life were among the weaker large caps during the day.

Foreign investors also remain sellers. Exchange data showed foreign institutional investors offloaded equities worth Rs 5,285.37 crore on Thursday, while domestic institutions bought a net Rs 3,319.39 crore. Until that foreign outflow slows, rallies concentrated in a handful of heavyweights may struggle to broaden out.

Global cues helped at the margin

The external backdrop was supportive rather than decisive. Brent crude slipped close to 1% to around $104.9 a barrel after reports that Washington is weighing a partial easing of restrictions on so-called shadow-fleet tankers to bring freight costs down. Asian markets also closed higher, with South Korea's Kospi up about 2% and Japan's Nikkei up 1.66%.

The levels traders are watching

Technical analysts said the Nifty's ability to hold above 23,000 for a second day is a constructive sign. Immediate resistance is seen near 23,200, and a sustained move beyond that could open the way towards the 50-day moving average in the 23,500 to 23,600 zone. On the downside, 22,800 is being treated as the first support. With HDFC Bank and Axis Bank due to report quarterly numbers over the weekend, Monday's session is likely to hinge on whether banks can take over the baton from IT.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.