Sensex, Nifty end at fresh record closing highs; ITC, HDFC lead contributors

The market gained momentum on Friday after a four-day consolidation streak, with equity benchmarks at fresh record closing highs on positive global cues and ahead of RBI policy due next week.

The 30-share BSE Sensex rose 135.70 points to 31,273.29 and the 50-share NSE Nifty advanced 37.40 points to 9,653.50, backed by index heavyweights ITC and HDFC.

The market continued its run-up to hit fresh record high but experts turned cautious, saying the rally is not fully supported by fundamentals and valuations are already stretched.

Currently, liquidity was boosting the market, but in the long term, fundamentals and earnings will have to improve to justify the high valuations, UR Bhat, Director at Dalton Capital Advisors said.

In fact, going forward, there could be disruptions — both domestic and global — that could have an impact on the economy and markets, he feels.

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Now, all eyes are on RBI monetary policy which is due on June 7. Majority of economists expect the central bank to maintain status quo.

“We continue to expect the RBI to be on a prolonged pause but with risks of a 25bp rate cut in August if certain conditions are met,” HSBC said in its report. It expects the central bank to lower its inflation forecast for FY18 at the upcoming June meeting.

For the week, the NSE Nifty gained half a percent while midcaps outperformed, up 1 percent.

Meanwhile, the Goods and Services Tax (GST) Council will finalise the contours of the new indirect tax system on June 3, in its 15th meeting as it is slated to be rolled out in the next four weeks. The Council, headed by Finance Minister Arun Jaitley, is likely to approve amendments to the draft GST rules.

Rates of these items could not be decided in the previous meeting owing to lack of time and a difference of opinion among various members of the Council.

The broader markets continued to outperform benchmarks for fourth consecutive session, rising over half a percent on positive breadth. About 1454 shares advanced against 1240 declining shares on the exchange.

HDFC shares gained 1.7 percent after its subsidiary HDFC Investments picked up 15 percent stake in First Housing Finance, Tanzania’s first housing finance company. In a Citi India Investor Conference, the country’s largest private housing finance company said it remained confident of the growth outlook in the near future on back of under penetration in the mortgage segment and India’s young demographic landscape.

Telecom operator Bharti Airtel gained 1.6 percent on getting approval from SEBI and stocks exchanges for merger with Telenor India.

Auto stocks were in action today. Hero Motocorp end at record closing high, up 2.82 percent after reporting 8.7 percent growth in May sales numbers. Tata Motors was up half a percent on showing healthy growth in JLR US sales and passenger vehicle sales. TVS Motor Company gained over a percent after reporting 16 percent growth in May sales data.

ITC, Adani Ports, Wipro, Cipla, Lupin and Sun Pharma gained 1-3 percent whereas ICICI Bank, Reliance Industries and Tata Steel continued to fall.

In broader space, GMR Infrastructure surged nearly 14 percent after the company said its gross debt reduced to Rs 19,856 crore in FY17 from Rs 37,480 crore in FY16.

Cadila Healthcare gained 5 percent after Zydus received approval from US Food & Drug Administration for antibiotic drug Levofloxacin injection, which filed from Moraiya plant that cleared with no observations in February.

Reliance Communications was down half a percent. Sources told CNBC-TV18 that lenders of the company may initiate strategic debt restructuring as sale of tower and mobility business deal being concluded. It has debt around Rs 44,000 crore.
European markets extended gains as investors focused on data and digested news that the US is withdrawing from the Paris climate change deal. France’s CAC and Germany’s DAX gained more than 1 percent while Britain’s FTSE was up 0.4 percent at the time of writing this article. Asia closed in green after positive lead from Wall Street.