Tech leads D-Street bound, FPI play in focus

Indian equities recovered on Friday after a two-day losing streak, with technology stocks leading the rebound. The gains came as investors returned to beaten-down IT shares, while easing crude prices and improving global cues provided some support.

The BSE Sensex rose 330.91 points, or 0.43%, to close at 77,264.51, while the NSE Nifty gained 84.80 points, or 0.35%, to 24,175.65.

August saw the culmination of the June quarter results by the middle of the month, and the results were well accepted by the markets as the positive surprises far outpaced the negatives, according to Dinshaw Irani, MD & CEO at Helios India.

He expects earnings growth of the mid- and small-cap universe to maintain outperformance vis-a-vis largecaps.

Technology stocks led the rebound, with the Nifty IT index gaining 3.5%, helped by strong earnings from US chipmaker Nvidia. Tech Mahindra, TCS and Infosys were among the strongest performers.

On the other hand, ICICI Bank, Shriram Finance and ITC were the key laggards.

ET Bureau

Foreign investor sentiment has improved after four consecutive months of selling. These funds turned buyers in July and have continued buying in August, too.

"If the recent improvement in FPI flows sustains, we could see a meaningful rerating of select large caps, particularly private banks," said Arihant Bardia, CIO and founder of Valtrust. "Overall, we believe the market is entering a phase where earnings delivery, rather than just liquidity, will increasingly drive returns."

Broader markets tracked the benchmark's strength, with the Nifty Midcap and Smallcap indices gaining 0.05% and 0.20%, respectively.

Other sectors such as metals and media also advanced, while banking and financial stocks remained under pressure.

"Large caps appear relatively attractive on valuations and can support lump-sum deployment," said Ankit Garg, fund manager at Wealthy Nivesh PMS. "Mid- and small-caps are closer to their long-term average valuations, but with sentiment yet to turn decisively bullish, we favour staggered allocation in these segments to manage volatility."

Easing geopolitical concerns offered some relief, with Brent crude hovering around $89 a barrel. Hopes of reopening the Strait of Hormuz have reduced fears of prolonged oil supply disruptions.

India VIX fell 3.70% to 10.66 after rising 5% in the previous session, pointing to easing near-term uncertainty.

Foreign portfolio investors net sold shares worth ₹5,039.80 crore on Friday, while domestic institutional investors bought shares worth ₹5,183.93 crore.