Financial stocks were the biggest contributors to the day’s rally contributing 163 points to Nifty. The top gainers were IndusInd Bank (see chart), Larsen and Toubro, Bajaj Finance, Bharti Airtel and Hero Motocorp. IndusInd Bank was the biggest gainer surging 46% , making it the stock’s single biggest day gain
Indian equities bucked the trend in other global markets to end the day in the green. This is the third straight session that markets have closed in the green with the benchmark Sensex gaining 1410.99 points or 4.94% to close at 29,946.77.
Led by banking stocks, the broader Nifty50 ended the day higher by 323.6 or 3.89% to close at 8641.45. According to the provisional data on the exchanges, foreign portfolio investors (FPIs) sold equities worth $64.35 million on Thursday. The net sales figures of FPIs have been steadily declining over the past few days. The market breadth remained remained positive with NSE Midcap gaining 3.11% and NSE Smallcap gaining 3.17%, respectively.
Market experts are of the view that at current levels, the valuations in equities have become attractive. According to the Singapore headquartered DBS chief investment office (CIO), equities are available currently at attractive valuations. It stated that US equities were more attractive than European equities. Additionally, Asia ex-Japan equities were more attractive than equities in Japan.
DBS CIO showed that US equities as an asset class enjoyed the maximum asset allocation in its portfolio. With a widening yield gap between equities and bonds, DBS CIO made a case for future shift into equities for its portfolio.
Closer home, Sorbh Gupta, associate fund manager, Quantum Mutual Fund, is of the view that the current market correction can help investors accumulate top tier stocks of their choice. “The valuations of equity markets have become attractive. Currently, even the leaders are available at good valuations so it’s a good time for investors to accumulate stocks.”
Financial stocks were the biggest contributors to the day’s rally contributing 163 points to Nifty. The top gainers were IndusInd Bank (see chart), Larsen and Toubro, Bajaj Finance, Bharti Airtel and Hero Motocorp. IndusInd Bank was the biggest gainer surging 46% , making it the stock’s single biggest day gain. Larsen and Toubro and Bajaj Finance were up 10% and 9.2% respectively. Bharti Airtel and Hero Motocorp were up by 8.3% and 7.04%, respectively.
Nifty Bank which had been underperforming the market since the February correction was up 6.13%. “Banking is a leveraged business, it always has a high beta which goes up and down on the basis of market movements. It could also be to do with technicals since, there was an F&O expiry on Thursday, there could be short covering,” Sorbh Gupta said.
Frontline indices were up between 3% and 6%. Sectorally, all the indices ended their day in the green Nifty Private Bank, Nifty Bank, Nifty Realty, Nifty Financial Services and Nifty FMCG were the biggest gainers. Markets have also been keenly watching out for stimulus packages to be announced by the government and central bank. Finance Minister Nirmala Sitharaman’s announcement of a Rs 1.7-lakh crore package for the most affected sections of the country on Thursday also got a thumbs up from the market.
Vinod Nair, head of research, Geojit Financial Services, said the key takeaway from the package was its solid support to rural and semi-rural economy due to high amount of benefit in terms of food, cash in hand and job safety. “It will provide safety to defensive stocks like the staple industries but does not provide any relief to corporates like banks, hospitality and others.” Markets in South Korea, Hong Kong and China were down by 1.03% to 0.60%. On the other hand, bourses in Europe at the time of press were also trading in the red.