FMCG, PSU banks lift markets as IT drags; Tata stocks caught in crossfire

Indian equities snapped their losing streak to close higher on Wednesday, driven by strong buying interest in fast-moving consumer goods (FMCG) and public-sector banking stocks, even as Tata group stocks remained volatile ahead of the Tata Sons board meeting to discuss succession issues.

The clear loser in the Tata pack was Tata Consultancy Services (TCS), which fell 2.6 per cent. Analysts said that while Tata stocks remained volatile ahead of the meeting, the weakness in TCS was also linked to broader industry conditions and global factors weighing on the information technology (IT) sector.

TCS, the largest company in the Tata group, has a market capitalisation of around ₹8 trillion. Of the 26 listed Tata group companies, seven closed higher, while 19 ended in the red.

The Sensex rose 0.45 per cent to close at 74,336.5, while the broader Nifty 50 gained 0.43 per cent to settle at 23,217.6.

“The index has formed a high wave candle following a strong bearish candle, indicating absorption of selling pressure and rejection of lower levels, with the formation suggesting consolidation with stock-specific action. Despite the recent stabilisation, the index has not yet formed a higher high–higher low structure, keeping the broader sentiment cautious,” said Pabitro Mukherjee, deputy vice-president of research at Bajaj Broking.

The Nifty FMCG index emerged as the top-performing sectoral index of the day, surging 1.6 per cent to finish at 45,559. This was its highest single-day gain since August 3. All but three of its constituents gained, led by Patanjali Foods, which rose 7.81 per cent. ITC and Hindustan Unilever gained 2.38 per cent and 1.23 per cent, respectively.

The sharp rebound in the FMCG sector comes after a prolonged period of weakness. Over the past year, the Nifty FMCG index has fallen 19.22 per cent, while the Nifty IT index has declined 19.67 per cent over the same period.

Short-term performance metrics also point to continued pressure, with the FMCG index down 6.29 per cent over the past month, 8.23 per cent over three months and 15.19 per cent year-to-date. It has gained 11.68 per cent over five years.

In contrast, technology stocks faced sharp selling pressure, offsetting some of the broader market gains. The Nifty IT index fell 1.6 per cent to close at 29,087.65, marking its worst single-day loss since September 9.

The weakness was broad-based, with all 10 constituents ending in the red. Heavyweights TCS and Infosys dragged the index lower, falling 2.76 per cent and 1.58 per cent, respectively.

TCS was the worst-performing stock in the index, followed by LTM, which fell 2.61 per cent, and Mphasis, which declined 2.58 per cent.

In the derivatives segment, TCS saw fresh call writing. The ₹2,300 call option fell 66 per cent, from ₹30 to ₹11.85, amid heightened attention ahead of Thursday’s Tata Sons board meeting.

“The festival season is expected to support retail consumption and consumer spending. Public-sector bank stocks (+1.4 per cent) also advanced after two consecutive sessions of decline, supported by renewed buying interest,” said Siddhartha Khemka, head of research, wealth management, Motilal Oswal Financial Services.

He added, “Indian equities are likely to remain cautious amid elevated crude prices, continued foreign institutional investor selling, and uncertainty ahead of the US Federal Reserve’s policy decision.”

The Nifty IT index has fallen 19.67 per cent over the trailing 12-month period. Despite Wednesday’s decline, it has gained 0.6 per cent over one week and 1.82 per cent over three months. It is, however, down 7.24 per cent over one month, 23.8 per cent year-to-date, 12.79 per cent over three years and 18.87 per cent over five years.