After trading close to the dotted line in the post noon trading session, Indian equity markets ended the day on a flat note. While the BSE Sensex today closed higher by 14 points, the NSE-Nifty closed higher by 12 points. However, Smallcaps and Midcaps were in much demand today. The BSE Mid Cap and BSE Small Cap indices closed higher by 1.7% and 3.0% respectively. Barring stocks from oil & gas and banking sectors, all the sectoral indices closed in green.
As regards global markets, Asian indices closed mixed today. The rupee was trading at Rs 58.73 to the dollar at the time of writing.
During the opening hours of trade today the NSE Nifty hit 7,300 level while the BSE Midcap index hit a record high. Considering favorable election results the markets have been reaching new highs. Especially sectors like engineering, infrastructure, real estate and power have seen huge gains as there are expectations that the new government will break policy deadlock and revive the economy. However, buying in to these sectors at such exorbitant levels can prove to be a costly mistake for investors who try to ride the sentiment rally. In fact, one needs to have a look at the valuations and fundamentals and then take any investing decision . Buying on sentiments could be the biggest mistake investors can make in the current rally which is favoring cyclical stocks.
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IT stocks have closed the day on a firm note with Moser Baer India and Info Edge being the leading gainers. As per the financial daily, India's fourth largest IT company HCL Technologies has bagged contract from a beverage company Pepsico. The contract pertains to providing infrastructure management services (IMS). While, the contract size is not disclosed, it is rumored the deal size could be of US$ 500 m, to be realized over 7 years period. Reportedly, Pepsico's IMS segment is growing at a good pace and also accounts for company's 30% revenues. In the last week also, the company had received contract from a pharma company for its IMS segment. Among HCL's various segments, IMS segment has been growth driver for the company. The robust performance during Jan-Mar quarter was largely attributable to better growth in its IMS segment. With more of incoming of contracts, this segment can expected to continue to deliver better growth.