1. Sensex rises for fourth day on Infosys rally

Sensex rises for fourth day on Infosys rally

Ongoing equity rally in India to continue, says Deutsche Bank report

By: | Mumbai | Published: April 19, 2016 6:15 AM

The Sensex on Tuesday closed at 25,816.36 points, up 189.61 points, while the broader Nifty closed at 7,914 points, crossing the 7,900 mark for the first time since January 1. Overall, Asian markets slipped as key benchmark indices were down between 0.7% and 3% amid failure in talks in Doha, to put a ceiling on oil supply by oil exporters. The Nikkei closed 3.4% lower as the yen gained as much as 0.7% against the dollar, to close to its highest since 2014.

Bengaluru-based tech giant, Infosys gained 5.7% to hit Rs 1,238.8 — the stock surged 8% intraday after brokers raised their price targets for the stock. Jefferies has upped the price target from Rs 1,300 to Rs 1,390. Infosys beat earnings estimates and reported a 3.8% q-o-q jump in its fourth quarter profit.

Realty stocks like Godrej Properties, Sobha and Oberoi Realty gained between 6% and 17% during the day’s trade. The BSE Realty index was up 4.4% after key real estate stocks like DLF, DB Realty, HDIL among others closed gaining over 2.5%.

According to experts, investor sentiment has improved in the past few days given falling inflation, above-average monsoon forecast by the India Meteorological Department (IMD) and the recent rate cut by the central bank.

According to an India Equity Strategy report by Deutsche Bank, the MSCI EM rose by 22% between January 21 and March 31 this year. This is attributed to a resumption in global risk appetite following a weakening dollar, steadying oil prices and most importantly a stabilising renminbi. The expectations of a medium-term cyclical rebound in China is likely to fuel risk appetite further, particularly aiding commodity and commodity equities.

The report also said, “We believe that the ongoing equity rally in India will continue in medium term driven by likelihood of normal monsoon rainfall, improvement in domestic indicators coupled with an accommodative Reserve Bank of India (RBI). Recent abatement in legislative inertia has kindled hope of a productive second half of budget session. Near-end of wholesale price index deflation should aid rebound in corporate earnings, in our view.”

Investor belief that the tail risks in the emerging markets universe are reducing following a sharp upward correction in oil and commodity prices and an appreciation in most emerging market currencies, are likely to be very supportive for market sentiment, the Deutsche report added.

Tags: BSE Sensex
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