Sensex ends up 162 pts despite tepid GDP growth; Nifty nears 10K, adds 1% in week

It was a good start to the September series on Friday as the Nifty moved closer to the psychological 10,000-mark despite sluggish economic growth in Q1FY18, driven by autos (after strong August sales data) and pharma stocks. Positive global cues also led support to the market.

The 30-share BSE Sensex was up 161.74 points at 31,892.23 and the 50-share NSE Nifty gained 56.50 points at 9,974.40.

Analysts feel, historically, September has been a trending month for the market that is closer to its record high; hence, it will be an interesting month to watch for. They don’t rule out new highs in the current month.

“The market will remain solid on a sustainable path, with minor corrections as investors believe in structural reforms being carried out in the country,” Vikas Khemani, President and CEO, Edelweiss Securities, said in an interview to CNBC-TV18.

“The potential of the economy growing at 8-9 percent, inflation going down, other markets not giving good returns is all making the market ignore short-term pain. Plus, domestically, money is coming in from investors in terms of financial assets,” he reasoned.

He feels GST, RERA and demonetisation had a short-term impact on the economy. “We are in the middle of a transformative phase and the GDP should be back to normalcy over the next couple of quarters,” he said.

Meanwhile, the Indian economy grew 5.7 percent in April-June, which was sharply lower than last year’s 7.9 percent expansion in same quarter last year and also lower than 6.1 percent growth in previous quarter. It indicated that the country was still reeling under the shock of demonetisation and disruption caused ahead of GST’s rollout.

The broader markets outperformed benchmarks not only today but for the entire week. In fact, today’s rally helped the Midcap index to recoup monthly losses.

The Nifty Midcap and BSE Smallcap indices gained more than 1 percent today on positive market breadth and rallied over 3 percent for the week. About 1,596 shares advanced against 988 declining shares on the BSE.

For the week, the Sensex gained 1 percent and Nifty rose 1.2 percent while the Nifty Midcap index rallied 3 percent.

Dr Reddy’s Labs was the biggest gainer among Sensex 30 and Nifty 50 stocks, rising nearly 10 percent after a settlement agreement with US-based Vivus to resolve a long-pending patent litigation related to anti-obesity pill (or weight management capsules) Qsymia.

The rally was also spilled over to other pharma stocks – Aurobindo Pharma surged 4.5 percent followed by Sun Pharma and Lupin with over a percent gain. Nifty Healthcare index gained 2.4 percent.

Auto sector hogged the limelight today as the Nifty Auto index gained 2 percent after better-than-expected sales data from all major companies for August.

Tata Motors (stock up 3.74 percent) showed 14 percent sales growth in August YoY and Ashok Leyland (5.4 percent) registered a 25 percent growth. Bajaj Auto (stock up 4 percent) reported 3 percent sales growth while Maruti Suzuki (1.43 percent) registered healthy 24 percent growth and Eicher Motors’ (1 percent) sales increased 22 percent compared with year-ago month.

The Nifty Metal index also gained 2 percent due to rally in global steel prices. Hindalco Industries, Nalco, Jindal Steel, Hindustan Zinc, SAIL, Tata Steel and Vedanta rallied 2-4 percent.

Reliance Industries closed above Rs 1,600 for the first time in 3 weeks, up 1 percent at Rs 1,609.35. Asian Paints rallied 4 percent whereas HDFC, TCS, Cipla, HDFC Bank, TCS, Wipro and Bharti Airtel lost 0.5-1.3 percent.

Among midcaps, Sun TV Network was the biggest gainer with 10 percent rally as investors turned bullish on the stock on hopes of digitisation push in Tamil Nadu.

Adani Enterprises gained 2.6 percent as the company announced partnership with SAAB for single-engine jet fighters. The stock gained nearly 25 percent during the week on all approvals for Carmichael coal mine in Australia.

Aditya Birla Capital was locked at 5 percent lower circuit at Rs 237.50 on first day of trading. Religare Enterprises shares plunged 10 percent, in addition to 7 percent loss in previous session.
European markets were higher as investors took note of several data releases and awaited a US jobs report. France’s CAC, Germany’s DAX and Britain’s FTSE were up 0.3-0.8 percent at the time of writing this article. Asian indices ended mostly higher after China’s Caixin manufacturing PMI data.