Street signs: Nifty Next 50 rebalance, home-grown tech stocks, and more

Nifty Next 50 rebalance a pick-me-up for non-F&Os

The recent sell-off in Adani Group companies has reduced the weighting of the non-futures and options stocks in the Nifty Next 50 Index. Consequently, the weighting of stocks that are part of the index but not of the derivatives segment will be revised upwards. “Avenue Supermarts is expected to be the biggest beneficiary in terms of flow. The impact is expected to be substantial on Bajaj Holdings & Investment, Procter & Gamble Hygiene and Health Care, Adani Total Gas, and Adani Transmission,” says analyst Brian Freitas, a New Zealand-based analyst with Periscope Analytics who has researched Adani Group. As part of the semi-annual rebalancing exercise, the NSE Indices (formerly India Index Services & Products) has announced the addition and deletion of five stocks to the Nifty Next 50 Index, while the composition of the Nifty50 index has been kept unchanged.  

Home-grown tech stocks may turn sideways

Indian information technology (IT) stocks are back in the reckoning amid sharp rally in global technology (tech) stocks. The Nasdaq has gained 13.3 per cent so far this year. The BSE IT Index has gained 7 per cent in 2023, even as the benchmark Nifty is down 1.4 per cent. Last calendar, the gauge for IT stocks had dropped 24 per cent, mirroring losses in the tech-heavy Nasdaq. “There is buying on the institutional side and some on the high networth individual side. The expectation was that because of a global slowdown, order flows would slow down as well. But that did not happen. Some defensive value buying is also happening,” observes an analyst. He expects tech stocks to consolidate around current levels. “Until there is more visibility around the order books over the next two quarters, IT stocks may move sideways,” he adds.

Weak Bank Nifty maybe a drag

Banking stocks witnessed intense selling pressure in the latter part of last week. Some key banking stock corrections were accompanied by large volumes. Analysts say weakness in the banking pack could weigh on overall market performance. The banking sector has the highest weighting in the National Stock Exchange’s Nifty and the S&P BSE Sensex. “The Bank Nifty Index on the daily chart witnessed a breakdown with the rise in volumes. The index remains in sell mode as long as it sustains below the level of 41,500. The index’s immediate support stands at 41,000. If it fails to sustain it on a closing basis, this will accelerate the downside move towards 40,000,” says Kunal Shah, senior technical analyst at LKP Securities. The Bank Nifty last closed at 41,132, after shedding 500 points, or 1.2 per cent on Friday.