India : Nifty ends above 8650; midcaps at record high, banks lead charge

MUMBAI : The bulls were back in form Thursday after two days of losses. Global markets were higher after minutes of Federal Reserve meet were released. Bank stocks led the charge ending 1.6 percent higher as the Bank Nifty closed at a new 52-week high. The Sensex was up 118.07 points or 0.4 percent at 28123.44. The Nifty ended up 49.20 points or 0.6 percent at 8673.25. About 1667 shares advanced, 1032 shares declined, and 178 shares were unchanged.

Midcaps had a good trading day, reaching record highs. Torrent Pharma, Indian Bank, Piramal Enterprise, Sun TV Network and MPL were major gainers among BSE Midcaps. NTPC, Adani Ports, Bharti Airtel, ICICI Bank and BHEL were top gainers while Coal India, L&T, Tata Steel, GAIL and HUL were losers in the Sensex.

Sunil Garg of JP Morgan Securities says renewed risk appetite and turnaround in commodities is adding to the current positive across emerging markets (EMs), which continue to outperform post Brexit.

Speaking to CNBC-TV18, Garg says the best among EMs currently is relatively cheap China, which is now reversing its downward trend. Relatively, India has been underperforming the other EMs.

Garg believes while in short-term, the US Federal Reserve’s commentary will impact markets, over longer-term, growth will come from earnings revival.

The Federal Reserve’s last policy meeting showed voting members divided over whether to raise interest rates soon. While policymakers agree that more economic data is needed before raising rates, some expect a hike will be needed soon, according to the minutes from the US central bank’s July 26-27 policy meeting. The Fed left rates unchanged at its last meeting in July but said near-term risks to the economy had diminished, leaving the door open for a possible rate hike this year.

India seems to be favoured by analysts and investors continue to receive good flow of funds. Moody’s Investors Service today retained India’s growth forecast at 7.5 percent for 2016 but revised upwards estimates for China to 6.6 percent citing strong fiscal and monetary support.

Moody’s now expects China to grow at the rate of 6.6 percent and 6.3 percent in 2016 and 2017, respectively as compared to the previous forecast of 6.3 percent and 6.1 percent, with the higher growth rate being driven by significant fiscal and monetary policy support.

Among Asian markets Japanese shares dropped in an otherwise positive Asian trading session, as a stronger yen weighed on sentiment. During trading hours, the Japanese yen strengthened as high as 99.62 against the dollar before retreating slightly.

Oil prices dipped in early trading as the prospect of record Saudi output weighed on markets and as traders cashed in on profits following an almost uninterrupted price rally this month of nearly 20 percent.