March 22nd 2024 Stock Market analysis

Heavyweight stocks drive Sensex, Nifty up; large caps likely to support further rally

On March 22 afternoon, benchmark indices Sensex and Nifty extended their bullish trend, with gains of up to 0.3 percent, buoyed by the rise in large-cap stocks as the financial year 2023-24 draws to a close. Despite concerns about 'froth' in mid-and small-cap segments contributing to ongoing volatility, analysts anticipate Nifty to maintain a positive bias, gradually aiming towards the 22,200-mark. Closing at 72,831 and 22,084 points respectively, Sensex gained 190 points, while Nifty rose by 72 points on March 22. Market breadth remained relatively balanced, with 2,288 shares advancing, 1,049 declining, and 102 unchanged.

Furthermore, broader markets also displayed positive trends on March 22, with the Nifty Midcap 100 and Nifty Smallcap 100 indices registering gains of up to 0.6 percent. The fear gauge, India VIX, experienced a 2 percent decline, hovering around the 12 level. Despite overall optimism, the Nifty IT index stood as an outlier, witnessing a decline of over 2 percent following Accenture's downward revision of its full-year revenue growth projection to 1 percent to 3 percent, down from the earlier range of 2 percent to 5 percent.

Technical Outlook on 26th March

Nifty is projected to find initial support around 21,948 followed by 21,800, with resistances anticipated at 22,244 and 22,392. Currently, Nifty shows signs of mixed trading.

For Bank Nifty, immediate support is expected near 46,661 and 46,399, while resistances are seen at 47,066 and 47,268. Bank Nifty is also experiencing a mixed trading sentiment at present.

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Derivative Outlook on 26th March

PCR Analysis: Nifty PCR-OI has increased with nifty has positive which shows PUT WRITING.

Open Interest Analysis: Nifty future March contract OI has decreased with positive close which shows Short Covering.

Cost of Carry Analysis: Nifty MARCH month contract has ended in high compare with APR contract and low range compare with previous session which indicates a mixed trade.

India VIX Analysis: India VIX has closed at 12.22 vs 12.51 (DoD) basis which shows decrease in volatility.

Accenture's Headcount Declines in Q2FY24, Echoing Indian Peers' Trend

Following the trend seen among its Indian counterparts, Accenture Plc, a major player in the information technology sector, experienced a sequential decline in headcount in the recently concluded quarter, reflecting a broader pattern of halting backfilling of vacant positions due to weak demand. On March 21, Accenture reported a decrease of 723 employees, bringing its headcount to 742,318 in Q2FY24, as per its September-August financial year cycle. This trend mirrors the reduction of 14,931 employees sequentially reported by the top five Indian IT companies in the third quarter ending December 31, 2023.

Given the significant presence of Accenture's workforce in India, its performance often serves as a barometer for trends within the expansive Indian IT sector. Despite an increase in attrition rate by 2 percentage points to 13 percent, contrasting with the downward trajectory seen in most IT companies, opinions among industry leaders remain divided on the impact of disruptive technologies like Generative Artificial Intelligence (Gen AI) on job redundancy. However, leading IT firms anticipate an eventual increase in employee headcounts once demand rebounds, opting to enhance efficiency through leveraging existing talent pools rather than downsizing.

In light of economic uncertainty leading to reduced client spending on consulting services, Accenture revised its revenue forecast for fiscal year 2024 on March 21, projecting a full-year revenue growth within the range of 1 percent to 3 percent, down from its earlier estimate of 2 percent to 5 percent.

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