Sensex, Nifty rally over 1% as IT stocks drive broad-based market gains

Mumbai: India's key stock gauges advanced more than 1% on Wednesday amid expectations that the recent sharp selloff in South Korea's SK Hynix and Samsung could trigger a rotation of overseas fund flows into locally listed technology companies.

The Nifty rose 264 points, or 1.1%, to close at 24,250. The Sensex rose 888 points, or 1.2%, to 77,654.

Elsewhere in Asia, China advanced 0.4% and Hong Kong rose 2%, while South Korean Kospi slumped 6%,Taiwan dropped 3.8% and Japan fell 1.5%. The pan-Europe index Stoxx 600 was down 0.3% as of press time.

"The massive correction seen in the Kospi, and artificial intelligence and chip-making stocks is now expected to trigger a shift in flows from AI-focused stocks toward the Indian IT sector, and this has fuelled investor optimism," said Rajesh Palviya, head of research, Axis Securities.

The Kospi is now down nearly 19% and Taiwan has fallen 11% in the past week. SK Hynix has slipped 26.7% and Samsung Electronics Co is down 22.5%.

The Nifty's IT index gained 2.3% on Wednesday, and is now up 9% in the past week, and 15% in the past one month. The Nifty 50 has gained 1.3% in one month.

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Palviya also said Nifty's positioning was light on the first day of the new series, which, along with strong rollover activity, easing crude oil prices, a stronger rupee and expectations of relative peace in West Asia, boosted investor sentiment.

Nifty's India Volatility Index (VIX), the fear gauge, fell 4.4% to 12.01 on Wednesday, indicating relief among traders. Out of the total 4,425 stocks traded on the BSE, 2,533 advanced and 1,705 fell at close.

Nifty Support Seen Higher
"The entire month of July has seen market moves driven by crude oil prices. The markets rallied on Wednesday, supported by the decline in crude prices toward the $85 a barrel mark, along with stock-specific action, as most Q1 results have been broadly in line, with no major negative surprises," said Sunny Agrawal, head of research at SBI Securities.

In higher beta assets, the Nifty Midcap 150 gained 0.8% and Nifty Small-cap 250 rose 1.3%.

Palviya said that since the Nifty managed to close decisively above the 24,200 level on Wednesday, its support has now moved higher to the 24,000-24,100 zone. "As long as the index holds above this range, it could move toward 24,350-24,400 in the near term," he said. Foreign portfolio investors net bought shares worth ₹2,982 crore. Domestic institutions were buyers to the tune of ₹998 crore.