Markets rise 466 points to close at four-month high

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July 7, 2020 1:45 AM

The biggest gainers on Nifty were Mahindra and Mahindra, Bajaj Finance, Hindalco, Tata Motors, and Reliance Industries which were up by 7.39%, 6.46%, 5.67%, 5.36%, and 3.75%.

Foreign portfolio investors have been sellers so far in July.

India’s stock markets started their week with a broad based rally with benchmark indices rising as much as 1.49% on Monday for the fourth straight session to close at their fourt-month highs. The equity markets were reacting to the positive momentum in the global markets. The benchmark Sensex was up by 465.86 points or 1.29% to close at 36,847.28 whereas, the 50-share index Nifty was up by 156.3 points or 1.47% to close at 10,763.65.

Foreign portfolio investors have been sellers so far in July. They pulled out $183.85 million in the last three trading sessions. But, on Monday they remained buyers in stocks pumping $51.3 million, according to provisional data on the exchanges. Domestic institutional investors sold stocks worth $34.6 million worth of stocks. FPIs have however remained buyers for two straight months in May and June owing to large blockdeals from companies such as Hindustan Unilever, Kotak Mahindra Bank, HDFC Life, among others.

The benchmark Nifty firmly traded with gains throughout the trading session and crossed the 10,800 mark only to close off the day’s highs. The Indian stock markets are rallying at a time when the corporate earnings have gone down. According to a report by Motilal Oswal Institutional Equities, Nifty sales declined 5.1% year on year, while earnings before interest, taxes, depreciation, and amortization (EBITDA) profit before tax and profit after tax (PAT) declined 4.8%, 28.6%, and 20.1%, year-on-year. PAT was dragged by autos, oil and gas, metals, private banks and non-banking finance companies (NBFCs).

“The Q4 FY 20 corporate earnings were muted but on expected lines. Given the disruption owing to the Covid-19 pandemic, earnings recovery seems pushed back by at least a year. Meanwhile, markets are looking beyond fiscal year (FY) 21, aided by global recovery and gradual return to normalcy,” said Motilal Oswal Institutional Equities in its report.

Indian equity markets pushed higher on Monday, even when the novel Coronavirus cases continued to rise. This is because of the indicators of economic recovery and de-escalation of tensions between India and China also fueled sentiment. Sufficient rainfall in the on-going monsoon season also buoyed sentiments as it signalled towards healthy demand in rural areas of the country.

Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said, “Markets are no longer looking at the Q4FY20 results or even Q1FY21 for that matter, the markets have already factored in a cut in the FY21 and FY22 earnings growth. Participants are aware that FY21 is a year of de-growth but, there is definitely hope on the revival in FY22, that story remains intact. On the domestic front, de-escalation in the India China tensions, decent monsoons indicating towards a good rural economy, and global liquidity is helping the markets momentum, however investors should maintain caution at current levels.”

India tracked the positive opening of the Asian markets which were up after the influential Chinese state media highlighted that fostering a healthy bull market after the pandemic currently is more important than ever. Shanghai Composite, the benchmark index in China rose by as much as 5.71% during Monday’s trading session. The bullish sentiment in China was followed by gains in benchmark indices in the rest of Asia. Stock markets in South Korea, Taiwan, and Hong Kong were up between 1.65% to 3.81%. The Asian markets also extended the gains of the previous session of the US markets which were up on better than expected US jobs data. European stock markets were also trading higher at the time of press with bourses in France, Germany, and the United Kingdom were up between 1.72% to 1.85%. The Dow Jones Mini futures were up by 364 points pre-empting an overnight rally in the US markets once again.

The futures and options segment on the NSE witnessed a turnover worth Rs 10.3 lakh crore against the six month average of Rs 14.49 lakh crore. The biggest gainers on Nifty were Mahindra and Mahindra, Bajaj Finance, Hindalco, Tata Motors, and Reliance Industries which were up by 7.39%, 6.46%, 5.67%, 5.36%, and 3.75%. The biggest losers on Nifty were Bajaj Auto, GAIL, Bharti Airtel, Wipro, and Dr Reddy’s Laboratories, down by 1.07%, 1%, 0.95%, 0.80%, and 0.75%. The Nifty Midcap and Nifty Smallcap were up by 1.69% and 1.82%. Sectoraly, the biggest gainers were Nifty Realty, Nifty Auto, Nifty Metal, Nifty Bank, and Nifty Private Bank.

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