Feb 25 (Reuters) - India's equity benchmarks closed marginally higher on Wednesday, as IT stocks clawed back some of the previous session's losses and as metals also rose, overpowering a drop in index heavyweight Reliance and state-owned lenders.
The Nifty 50 rose 0.23% to 25,482.50 and the BSE Sensex added 0.06% to 82,276.07. Both indexes advanced about 0.9% earlier in the session, following a more than 1% fall on Tuesday.
The IT index advanced 1.6% after a 4.7% fall a day earlier. Rapid developments in AI are spurring questions about the long-term outlook for India's IT sector, even as executives frame disruption as an opportunity.
"While IT companies' valuations have turned attractive after the recent drop, investors will stay cautious because AI's impact on earnings growth and margins remains uncertain," said Amnish Aggarwal, director of institutional research at PL Capital.
IT shares, which carry roughly an 11% weightage in the blue-chip indexes, the second-highest, have lost 19.7% in February so far.
"There may be an intermittent, technical bounce in IT like in today's session, but it's too early to have a constructive view on the sector," Aggarwal said.
Eleven of the 16 major sectors logged gains. The broader small-caps and mid-caps rose 0.9% and 0.6%, respectively.
Metals gained 2.7%, led by Tata Steel, JSW Steel and Jindal Steel on price-target hikes by CLSA, citing gains from the recent imposition of a safeguard duty and the rise in steel prices.
Vedanta jumped 4.7% after BofA Securities upgraded the shares and raised their price target.
State-owned banks fell 0.4% while the third-heaviest stock in benchmarks, Reliance Industries lost 2.1%.
"Markets are likely to consolidate in the near-term as geopolitical risks and AI-linked worries for (the) IT sector clash with strengthening earnings (and) a brighter demand outlook," Aggarwal said.
Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman, Ronojoy Mazumdar and Mrigank Dhaniwala
Source: Reuters