Bulls lift market to new closing high: Nifty above 9500, Sensex gains 260 pts
Bulls remained in charge at Dalal Street on the day when Narendra Modi completed three years in office, taking equity benchmarks to fresh closing highs. Likely normal monsoon, FIIs’ renewed buying interest, stable earnings and PSU banks recapitalisation buzz boosted market sentiment.
The 50-share NSE Nifty closed above the psychological 9,500-mark for the first time, up 66.85 points at 9,512.25 while the 30-share BSE Sensex gained 260.48 points at 30,582.60, backed by FMCG, PSU banks, auto and technology stocks.
The market continued its run-up despite expensive valuations, which indicated that it may be pricing in likely strong earnings in FY18 as well as in FY19 and normal monsoon, experts said. According to them, the 9000 level is expected to be a major support for Nifty.
IL&FS feels the market could continue to rise even if valuations are expensive. “It is a blue sky scenario right now with low inflation rates and interest rates, among others. The market tends to go with the momentum in such cases,” Vibhav Kapoor of IL&FS said.
He further said that it would not be a surprise if the Nifty touched 10,000 in a few months. Meanwhile, given the overall valuation matrix, levels of 9600-9700 could be a resistance for the index, he added.
In days to come, ICICI Securities believes the consolidation with a positive bias may continue and the Nifty may move towards 9600.
One big reason for such optimism is flows of domestic saving into equity markets, said Porinju Veliyath, Equity Intelligence India. He expects USD 100 billion of household savings to flow into Indian equity markets, although some market participants might doubt that figure.
He said the large part of the rally would be led by domestic companies or companies which are focussed on economic activity while export-oriented companies might take a back seat.
Foreign institutional investors bought nearly Rs 4,000 crore worth of shares in the last four consecutive sessions (till Monday), though DIIs booked some profits.
The broader markets underperformed benchmarks, with the BSE Midcap and Smallcap indices up around 0.3 percent.
Meanwhile, DS Pai, Director (Long Range Forecast) India Met Department said monsoon would reach Kerala by May 30 and could arrive on the west coast at a normal time. He sees low probability of El Nino currently and expects normal rainfall in most parts of the country. He still sticks to 96 percent long period average of monsoon.
PSU Bank index gained the most on recapitalisation hope, up more than 2 percent. Union Bank rallied nearly 4 percent as CNBC-TV18 reports quoting government official said the bank is first to sign MoU with government for capital support.
Official said MoU would be signed only with weak banks that require capital and the government would provide Rs 10,000 crore in capital if banks are fast with NPL resolution. Bank of India, Bank of Baroda, Canara Bank and SBI gained 2-3.5 percent.
Punjab National Bank surged 4.5 percent on improvement in asset quality despite higher slippages. The bank turned profitable with fourth quarter net income at Rs 262 crore and net interest income jumped 33 percent YoY.
IDBI Bank was up nearly 2 percent as sources told CNBC-TV18 that the bank is eyeing sale of stake in 35 unlisted companies by June.
FMCG as well as auto stocks gained on hopes of normal monsoon. ITC was the leading contributor to Sensex’ gains, up 2.2 percent while HUL rose 1.6 percent ahead of March quarter earnings due on Wednesday.
Among auto stocks, Maruti Suzuki ended at record closing high of 6,952.60, up 2 percent. Hero Motocorp, Bajaj Auto and Tata Motors rose 1-3 percent.
Auto, IT and FMCG indices gained 1 percent each. Infosys was up 0.5 percent as Maubank adopted company’s Finacle leasing solution to drive business growth while TCS surged 2.66 percent and Wipro was up 1.7 percent.
Dr Reddy’s Labs rose 1.75 percent as its cancer drug bendamustine solution received approval from the UK regulator and it launched Resof tablets (hepatitis C drug) in India.
Among largecaps, Reliance Industries (up 1 percent) and Bharti Airtel (up 3 percent) were gainers while M&M, ONGC, Adani Ports, Coal India, BHEL and Cipla were down 0.3-1 percent.
