Stock Market Update: IT Sector Drops, Buy Recommendations
The Indian stock market experienced a downturn on February 12, ending a four-day winning streak primarily due to a sharp decline in the IT sector. The Nifty 50 index dropped by 146.65 points, settling at 25,807.20, while the Sensex fell by 558.72 points to close at 83,674.92. This decline was largely attributed to the "Anthropic Shock," a term used to describe concerns stemming from advancements in enterprise AI tools that have impacted traditional software exporters.
The Nifty IT index faced a significant drop of 5.51%, with major companies like Tech Mahindra, Infosys, and TCS leading the losses. The overall market sentiment remained cautious, with a weak advance-decline ratio of approximately 2:3, highlighting a broad-based profit booking trend.
Despite the negative day for the stock market, there are two stock recommendations from MarketSmith India. Investors are advised to buy LG Balakrishnan & Bros Ltd. at the current price of ₹2,007 and Billionbrains Garage Ventures Ltd. at ₹179.50. These suggestions reflect a cautious optimism amidst market fluctuations.
From a technical perspective, the recent price action indicates a potential pullback within a broader medium-term uptrend. The Nifty index continues to trade above its long-term rising trendline, suggesting that the market may still have room for upward movement. The RSI has shown signs of improvement, indicating a neutral-to-positive bias, although there is a lack of strong conviction at this moment.
Market analysts suggest that immediate support levels for Nifty are likely around 25,400 to 25,100, where buying interest may emerge on further declines. Conversely, the resistance levels are seen between 25,800 and 26,000, marking a significant hurdle for upward movement. A sustained close above 26,000 could signal a resurgence of bullish momentum.
In terms of Nifty Bank performance, the index opened slightly higher but faced profit booking throughout the session, closing at 60,739.75. The underlying structure remains constructive, indicating potential for gradual upside extension unless a decisive break below 59,500 occurs. With stable fundamentals in the banking sector, investors are encouraged to adopt a buy-on-dips strategy.
Overall, while the market has faced recent challenges, there are indications of resilience and potential recovery. Investors are advised to remain vigilant and consider the recommendations provided as they navigate through the current market landscape.
