Mumbai: The Indian stock market opened on a positive note on Friday. Despite the US suspending several major IT and outsourcing companies from the Permanent Labor Certification Program, the IT sector witnessed strong buying. The Nifty IT index was trading with a gain of 2.73 percent.
The Nifty 50 rose 70.55 points, or 0.32 percent, to open at 22,303.35. Meanwhile, the BSE Sensex was trading at 71,747.82, up 154.5 points, or 0.22 percent.
IT stocks saw the most buying
After Thursday’s decline, most sectoral indices saw improvements on Friday. The Nifty IT index rose 2.73 percent. Additionally, Nifty FMCG gained 0.96 percent, Nifty Private Bank 0.56 percent, Nifty PSU Bank 0.47 percent, and Nifty Metal 0.26 percent.
Nifty Pharma rose 0.22 percent, and Nifty Auto 0.12 percent. Thus, most major sectors were in the green in early trade.
US action increases challenges for IT companies
US Labor Secretary Keith Sonderling announced on Thursday that the US government has suspended some major IT outsourcing companies from the Permanent Labor Certification Program. The list includes Cognizant, Infosys, Tata, Wipro, HCL, and Capgemini. Microsoft and Adobe have also been suspended from the program.
The US Department of Labor cited several active federal investigations as the reason for this action.
According to Sumit Singhania, Head of Research at Bajaj Broking, this development has increased uncertainty for Indian IT companies already facing pressure. This could result in increased costs for recruitment and regulatory compliance.
He added that if companies have to rely more on local employees and subcontracting, their costs could rise. This is expected to pressure operating margins in the near future and increase volatility in IT stocks.
Investors eye crude oil and US bond yields
High crude oil prices and US bond yields continue to weigh on the broader stock market direction. At the time of writing, Brent crude was trading down 1.13 percent at $103.10 per barrel.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said that in these circumstances, a strategy of selling shares when the market rises could be adopted.
He explained that the market has weakened due to continued selling by foreign institutional investors (FIIs). Selling has also been seen in shares of large companies with strong fundamentals during this period.
According to Vijaykumar, as long as crude oil prices and US bond yields remain high, selling by foreign investors is likely to continue. This situation could also put pressure on large-cap stocks with attractive valuations. According to him, FIIs have sold shares worth ₹36,210 crore through exchanges so far in October.
Mixed Trends in Asian Markets
Asian markets also witnessed mixed trends on Friday. Japan’s Nikkei fell 0.58 percent to trade at 68,640. Singapore’s Straits Times rose 0.16 percent to 5,385, while Hong Kong’s Hang Seng rose 0.96 percent to trade at 24,015.
Meanwhile, stock markets in Taiwan and South Korea were closed due to holidays.