Nifty ended pretty much flat in today’s trade as investors opt to put a pause after two days of the heavy rally that Indian markets have ever seen. However, there was a lot of stock-specific action that we experienced today. Infosys (NS:INFY) was the best performing stock on Nifty 50 and made gains of around 4% today. Reliance Industries Ltd (NS:RELI) also surged by more than 3%.
Not only just Infosys but also other IT stock which includes Tech Mahindra (NS:TEML), Tata Consultancy (NS:TCS), and HCL Technologies Ltd (NS:HCLT) shone in today’s trade. The broad-based rally in Nifty IT index (up by almost 2%) was more to do with Rupee depreciating by 0.33% (see USDINR) today at the time of this writing. IT and Pharma are two sectors that are export-oriented, and their stocks do well in the event of Rupee depreciation.
However, there were some other reasons as well why IT stocks were up today. Infosys and TCS were named in the list of World's Best Regarded Companies compiled by Forbes. Infosys was ranked third, while TCS (22nd) and Tata Motors (NS:TAMO) (31st) also rounded up top 50 rankings. No wonder Tata Motors’ stock was up by 2.35% today. Tata Motors also got a boost from the statement from Maruti Suzuki India Ltd. (NS:MRTI) chairman RC Bhargava that September will likely be a better month for the company than August. His statement bodes well for the auto sector in general, which has been struggling of late. In my sector-specific analysis earlier today, I mentioned that the auto sector would be one of the biggest beneficiaries from the recent corporate tax rate cuts announcement made by the government.
The surge in Reliance stock happened after brokerage firm Morgan Stanley (NYSE:MS) stated that Reliance’s “growth is set to get a boost from better refining margins, lower tax rate and cheaper gas feedstock costs.” Reliance aims to be a debt-free company by 2021 and to meet this target, the company has been divesting some of its businesses. Last month, Saudi Aramco bought 20% stake in Reliance’s oil-to-chemical business at a valuation of $75 billion.