India : Bumper rally, Global cues lift Sensex 500 pts, Nifty above 8450
Mon Jul 11 2016
Rajesh Sharma (2003 articles)

India : Bumper rally, Global cues lift Sensex 500 pts, Nifty above 8450

Mumbai : After last week’s consolidation, bulls were back in action on Monday as equity benchmarks ended at fresh 2016 closing highs with the Sensex rallying 500 points. The rally in global peers post election results of Japan & US jobs data and value buying boosted sentiment.

The 30-share BSE Sensex surged 499.79 points or 1.84 percent to 27626.69 and the 50-share NSE Nifty rallied 144.70 points or 1.74 percent to 8467.90.

The broader markets also participated in the rally with the BSE Midcap ending at record closing high, up 1.5 percent. About 1721 shares advanced against 1042 declining shares on Bombay Stock Exchange.

Considering today’s breakout, experts expect the Nifty to reclaim 8500-8600 levels soon. Once these levels are breached, it is advisable to book some profits, they advise.

“On a relative scale, India is looking much better than many of the other countries which is why we are seeing this outperformance that India is seeing. We are seeing a lot of domestic participation,” Sridhar Sivaram of Enam Holdings says.

According to him, the market can move up another 5 percent or 7-8 percent depending on the earnings growth. “My gut would be that returns in the larger market, not the midcap, will be in-line with earnings growth,” he says.

Asian markets closed higher on election results in Japan and Australia but shrugged off concerns that strong US jobs report might push the Federal Reserve closer to hiking rates. Japan’s Nikkei was the biggest gainer among global peers, up 4 percent on hopes of fiscal stimulus to boost economy. Hong Kong’s Hang Seng gained 1.5 percent and China’s Shanghai was up 0.3 percent.

European markets also started off day on a positive note on hopes of Japan’s stimulus and after US jobs data. France’s CAC, Germany’s DAX and Britain’s FTSE were higher by 0.7-1.2 percent (at 16 hours IST).

On home turf, the rally was broadbased as all sectoral indices ended in green with PSU Bank leading the charge, up nearly 4 percent followed by Auto and Metal with 2 percent upside. Bank Nifty ended at fresh 10-month closing high, up over 2 percent.

PSU banks surged after sources told CNBC-TV18 that the government is likely to announce PSU Bank recapitalisation plan this month and may infuse Rs 20,000-30,000 crore in one tranche. State Bank of India, Union Bank, Bank of India, Canara Bank, Bank of Baroda and Allahabad Bank were up 3-7 percent.

Punjab National Bank surged 9 percent after the Reserve Bank of India removed the bank from its caution list, allowing foreign investors to buy shares.

Tata Motors was up over 4 percent on strong global wholesales data in June. Sun Pharma rose 1.4 percent on launch of Gemcitabine InfuSMART (ready-to-administer bag for oncology treatment) in the Europe.

Coal India gained nearly 3 percent. After market hours, sources told CNBC-TV18 that the board of directors of the company has approved share buyback and through this the government may raise upto Rs 3,000-3,500 crore.

Tata Steel climbed 2.7 percent as the company entered into discussion for a JV with Thyssenkrupp for its European businesses, saying it will start separate processes for sale of Specialty Steels and Hartlepool pipe mills in the UK.

Bharti Airtel gained 1.3 percent. Telecom ministry has clears Airtel-Aircel’s Rs 3,500 crore 4G spectrum trading deal on July 4.

IndusInd Bank was down 0.25 percent after hitting a record high of Rs 1,147.50. Profit of the bank in Q1 increased a whopping 26 percent YoY on higher net interest, other income and operating profit despite higher provisions and tax expenses. Asset quality slightly weakened on sequential basis.

Among other largecaps, HDFC Bank, ICICI Bank, HDFC, Adani Ports, Lupin, Maruti and Hero Motocorp rallied 2-5 percent while Axis Bank was the only loser on Sensex 30.

Rajesh Sharma

Rajesh Sharma

Rajesh Sharma is Correspondent for Stock Market of South East Asia based in Mumbai. He has been covering Asian markets for more than 5 years.