Sensex, Nifty buck global trend, rally for the second straight session – RIL, HDFC Bank main driver

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Published: July 18, 2020 8:56 AM

The stock markets in Friday’s session traded firmly in the green and gained the most in the last hour of trade closing at the high point of the session.

The markets on Friday saw a turnover worth Rs 10.75 lakh crore in futures and options segment.The markets on Friday saw a turnover worth Rs 10.75 lakh crore in futures and options segment.

India’s stock market bucked the global trend on Friday and rallied for the second straight session to end the week with gains. Indian equities were helped by the strong upward movement in Reliance Industries and HDFC Bank. The benchmark Sensex rallied 548.46 points or 1.5% to close at 37,020.14. The broader Nifty rose 161.75 points or 1.71% to close at 10,901.7.

After a volatile trading week, the Indian markets ended higher by 1.2% for the fifth straight week. Nifty Bank broke the four week winning streak and declined by 1.9%. The stock markets, despite the rising coronavirus cases and fresh lockdowns being imposed in several parts of the country, rose on the back of upbeat sentiments in global markets with respect to a Covid-19 vaccine.

Sanjeev Zarbade, vice president – private client group, Kotak Securities said, “Hopes of an early launch of Covid-19 vaccine kept global market sentiments positive. Although the Sensex remained volatile, it managed to gain 1.1% in the current week. Rising Covid-19 cases, but better than expected Q1 fiscal year 2021 IT sector results, led by Infosys, buoyed investor sentiment.”

The stock markets in Friday’s session traded firmly in the green and gained the most in the last hour of trade closing at the high point of the session. Nifty broke the 200 day moving average (DMA) and settled at 10,901.7. Nagaraj Shetti, technical research analyst, HDFC Securities, said, “The breakout of 200 DMA shows that the market is in a strong momentum phase, the markets are euphoric and could reach the 11,100 to 11,250 mark and given the strong momentum that the markets are witnessing it could happen in the next one to two weeks. The broader markets have reduced participating and the upmove has been led by a few large stocks that have participated continuously.”

The stock markets were supported by the gains in the heavyweights Reliance Industries and HDFC Bank. The shares of HDFC Bank rose by 3.84% during Friday’s session to close the day at Rs 1103. The rally in the HDFC Bank stock comes ahead of its Q1 results that the bank will report on Saturday. Financial stocks have been unde duress ever since the stock markets crashed in March. The banking stocks have been under pressure and have under-performed the Nifty since April due to the growing concerns on asset quality, impact of loan moratoriums and economic recession on them.

According to a report by Motilal Oswal Institutional Equities, the banking sector earnings are likely to remain muted due to Covid-19 related lockdown and its impact on growth and asset quality. “While the moratorium or standstill benefits continue, we expect banks to further strengthen their balance sheets by making healthy provisions. Moreover, declining interest rates alongwith higher liquidity on the balance sheets should keep margins under pressure (nearly 10-20 basis points for private banks),” said Motilal Oswal Institutional Equities in its report.

Foreign Portfolio Investors (FPIs) have remained sellers throughout the month of July pulling out $569.45 million in total from Indian equities. FPIs on Thursday sold stocks worth $143.5 million and domestic institutional investors bought stocks worth $218 million. The markets on Friday saw a turnover worth Rs 10.75 lakh crore in futures and options segment against the six month average of Rs 14.9 lakh crore, according to NSE data.

Stock markets in Europe were trading flat as the EU summit to discuss the post pandemic recovery fund was underway. Stock markets in Germany and the United Kingdom were up by 0.2% to 0.5%. The bourse in France was down by 0.2%. Dow Jones Mini Futures were up by 121 points at the time of press. Asian markets gained during Friday’s session with stock markets in China, Hong Kong and South Korea trading 0.1% to 0.8% higher. The biggest gainers on Nifty were BPCL, ONGC, Bharti Infratel, GAIL and Reliance Industries, up by 12.43%, 5.84%, 4.32%, 4.08%, and 3.94% respectively. The biggest losers were Hindalco, Britannia, Nestle, TCS, and Dr Reddy’s Laboratories, which lost 1.9%, 1.86%, 1.47%, 1.2%, and 0.8% respectively. Nifty Mid cap and Nifty Small cap rose by 1.3% each.

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