Sensex rises 600 pts from day's low, Nifty at 23,100: Buying in IT shares among key reasons behind market gain

Key reasons behind market gain The IT index gained 1.7% amid a drop in global artificial intelligence-linked stocks in Asia on worries that huge and rising AI spending may not deliver sufficient returns. Analysts view Indian IT companies as relatively defensive beneficiaries when AI-linked stocks sell off, as enterprises may favour cost-cutting, automation and outsourcing over expensive in-house AI investments.

Stocks in the information technology space also traded higher after global IT services giant, Cognizant, reported stable results for the quarter-ended September. Its revenues grew 4.8% on year in constant currency to $5.66 billion. This was largely in line with the Street's estimate of $5.65 billion. Bookings increased 4% to $28.7 billion, and these included three large deals with a total contract value of $100 million or more.

Both benchmarks gained over 1% each in the previous session, after strong quarterly results from key constituents and as the US Federal Reserve held interest rates steady as expected. The Nifty and Sensex have gained 1.6% and 2.5% in October so far, on course to snap a two-month losing streak. "Markets remain supported by selective earnings resilience and domestic demand stability, although elevated Brent and persistent Mideast uncertainty remain key risks," said Vinod Nair, head of research at Geojit Investments.

Ten of the 16 major sectors logged losses. The broader small-caps and mid-caps dropped 0.9%and 0.5%, respectively. In the 50-stock index, Infosys, ICICI Bank, and Trent aided most to the gains. Trent was the best performer in the index, up almost 6%. The stock move came after the company reported its earnings for the September quarter post trading hours Thursday. The company's like-for-like sales growth, at mid-single digits on a yearly basis, was a key positive.

InterGlobe Aviation rose almost 3%. The company's consolidated earnings before interest, taxes, depreciation, amortisation, and rent for the September quarter expanded to 10.5% from 6% a year ago. Nifty needs to trade below 22,900 for any further bearishness to emerge in the market, said analysts. "A follow through strength will open further upside towards 23,150 levels. Failure to do so will lead to consolidation in the range of 22,650-22,950.

Key short-term resistance is placed at 23,175-23,200 levels being the confluence of the 50 days EMA and the last week high, index overall short-term bias remains down below the same," said Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking. "While turbulence is expected early in the day, we will wait for a direct fall below 22,715 to abandon upside hopes. That said, we will continue to aim for the 23,050-objective pencilled in yesterday, as long as dips are contained above 22,820," said Anand James, Chief Market Strategist, Geojit Investments Limited.