Domestic Indices Open Higher Amidst Volatility; HCLTech Stock Drops After Q3 Results
The domestic benchmark indices opened higher on Tuesday, with the NSE Nifty 50 and BSE Sensex both showing positive movement. However, HCLTech’s stock experienced a sharp decline of 9 per cent in early trade following the release of its Q3 results, which were deemed underwhelming by analysts.
Brokerage firm Nuvama downgraded HCLTech to “hold” from its previous “buy” recommendation, citing the disappointing quarterly performance. Despite this, the broader market remained resilient in the early hours of trading. By 9:16 a.m., the Nifty 50 had risen by 113.60 points, or 0.49 per cent, to 23,199.55, while the Sensex gained 370.21 points, or 0.49 per cent, reaching 76,700.22.
Market experts noted that the broader market’s overvaluation concerns continue to manifest, with some predicting a sharp correction. The reversion to mean valuations has started to impact large-cap stocks, and factors such as a strengthening US dollar, rising 10-year US bond yields above 4.7 per cent, and uncertainties surrounding former US President Donald Trump’s post-January 20 actions have contributed to the ongoing market correction.
The Nifty had fallen 1.5 per cent on Monday, marking its fourth consecutive day of decline and the sixth drop in seven sessions. Technical analysts, however, pointed to a potential support level around the 22,830-23,000 range, with some near-term time cycles aligning in the January 17-23 window, suggesting the possibility of a short-term rebound.
Akshay Chinchalkar, Head of Research at Axis Securities, mentioned, “Technically speaking, the 22,830-23,000 area is notable support from here, with some near-term time cycles coming together in the January 17-23 window.” He further suggested that while a bounce-back is possible, the recovery may not be sustained, particularly for mid and small-cap stocks. Experts recommended that retail investors focus on quality large-cap stocks, which are currently undervalued, and adopt a patient approach.
In terms of institutional activity, foreign institutional investors (FIIs) sold equities worth Rs 4,892.84 crore on January 13, while domestic institutional investors (DIIs) bought equities worth Rs 8,066 crore on the same day. This indicates a contrasting sentiment between foreign and domestic investors.
Given the current volatility, Hardik Matalia from Choice Broking advised traders to exercise caution, implement strict stop-loss measures, and avoid carrying long positions overnight to manage risk effectively. The market’s mixed signals highlight the need for careful navigation in these uncertain times.
