A Fortnight of Fluctuations: Oil & Gas and IT Sectors Rise Amid Market Volatility

Ninad Ramdasi / 25 Jan 2024/ Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Editorial, Market Moves, Market Watch

Experiencing high volatility in the market, the oil & gas and IT sectors endeavoured to counterbalance losses incurred by banking stocks, aiming to sustain resilience.

Over the last fortnight, Indian benchmark indices have experienced a roller-coaster ride, driven by factors such as quarterly earnings announcements, a rally in the IT sector, and substantial selling by foreign institutional investors (FIIs). While FIIs turned into net sellers, domestic institutional investors (DIIs) transitioned to become net buyers, contributing a net inflow of ₹17,571 crore. Meanwhile, FIIs recorded a sizeable net outflow of ₹26,873 crore over the last 15 days. Consequently, the BSE Sensex concluded the period with a 0.84 per cent decline, and the Nifty 50 also registered a 0.60 per cent drop.[EasyDNNnews:PaidContentStart]

In contrast, broader indices exhibited resilience, outperforming the main indices by a considerable margin. The BSE Mid-Cap Index recorded a gain of 1.79 per cent, and the BSE Small-Cap index witnessed a surge of 1.84 per cent. Varied investor sentiment was observed across different sectors. The oil and gas sector emerged as the top gainer, with its sectoral gauge, the BSE Oil & Gas Index, registering gains of 6.62 per cent, primarily driven by a significant rally in the shares of Reliance Industries ahead of the result announcement.

The company recorded an 11 per cent growth in net profit, reaching ₹19,641 crore compared to the corresponding period of the previous year. Meanwhile, the gross revenue for Q3FY24 experienced a 3.2 per cent year-on-year rise, reaching ₹2,48,160 crore, driven by sustained growth in consumer businesses. Additionally, the International Energy Agency (IEA) forecasted robust growth in global oil demand, leading to a rise in oil prices.

Globally, the tide has turned for the IT sector, evident in the S&P 500 reaching a record high driven by a bull-market momentum fuelled by substantial gains in the IT sector. Despite prevailing subdued market sentiments and significant FII selling, domestic IT majors also experienced a robust rally. As a consequence, the BSE Information Technology index surged by over 5 per cent in the past two weeks. Investors continued to show interest in the auto and real estate sectors, drawn by their sustained strong momentum.

Following the quarter result announcement by HDFC Bank, banking stocks underwent an abrupt and sharp downturn. In Q3FY24, HDFC Bank announced a 33 per cent growth in net profit, reaching ₹16,372 crore compared to ₹12,259 crore the previous year. Additionally, its net interest income (NII) grew to ₹28,471 crore from ₹27,385 crore in the preceding quarter. The results fell short of expectations, raising concerns about operating profitability and increased provisions. Shares of HDFC Bank experienced a sharp decline of over 12 per cent in the past two weeks, hovering close to its 52-week low, while HDFC Bank ADRs also slumped due to substantial selling pressure.

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