Sensex rises 399 points, Nifty tops 11,000 mark — Markets gain despite the muted global cues

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Published: July 21, 2020 2:00 AM

According to him, on the fundamental side, current account surplus could be considered as a positive which also might be causing the rally.

The 30-share index Sensex was up by 398.85 points or 1.08% to close at 37,418.99.The 30-share index Sensex was up by 398.85 points or 1.08% to close at 37,418.99.

Indian equities rallied on Monday with the benchmark Nifty sailing past 11,000 points. The rally was led by IT stocks and Britannia Industries. Markets gained despite the muted global cues and ended their day at a four-month high.

The 30-share index Sensex was up by 398.85 points or 1.08% to close at 37,418.99. The broader Nifty50 was up by 1.11% or 120.5 points to close at 11,022.2. The Nifty reclaimed the 11,000 mark for the first time since March 5.

During the last hour of trade, the benchmark Nifty saw volatility due to the announcements being made with respect to the AGR ruling and volatility in telecom stocks. Stocks such as Vodafone Idea and Bharti Airtel, which were earlier trading higher, saw their momentum fizzle out during the last hour of trade. The stocks, however, ended well in the green up by 1.12% and 2.03%.

The benchmark was supported by a strong rally in IT stocks which helped the markets end higher. The stock markets also rallied after Britannia Industries, the fast moving consumer goods (FMCG) major reported strong numbers for Q1, the volumes of the business grew by 21.5%. This coupled with the positive management commentary in terms of market share gains, low inventory, and anticipation of strong rural demand sustaining among others led to the stock price rallying. Many brokerages upgraded the stock after the company announced its results. HSBC Global Research in its report said, “The recent rally in the share price is also largely in part a catch-up rally (2-year stock CAGR is just 8%, as volume growth suffered last year due to rural slowdown), hence momentum is likely to sustain if the growth remains stronger beyond Q1. We increase our earnings estimates by c15% and target price to Rs 4,500; upgrade the stock rating to Buy from Hold.” Britannia’s stock price rallied by 5.12% to close at Rs 3,978.8.

Indian equities have been rallying despite the tepid global cues and rising novel Coronavirus cases. Institutional activity in the stock markets has also slowed down with foreign portfolio investors (FPIs) selling stocks worth $544.37 million till July 16. According to provisional data on the exchanges, the FPIs on Friday bought Indian stocks worth $91.7 million. Domestic Institutional investors have sold stocks worth Rs 2239.37 crore in July but, the benchmarks have rallied by nearly 7% since the start of the month. This according to market experts is because of the retail money that is driving the markets. Ambareesh Baliga, an independent market expert, said, “The rally is showing the power of retail money in the markets. A lot of these investors are first time investors bringing new money into the markets. At whichever point they may have entered, be it April or May they have made good profits which has led to heightened confidence leading to further investment, thus supporting the rally.”

According to him, on the fundamental side, current account surplus could be considered as a positive which also might be causing the rally.

Global markets saw reflected sentiment on Monday with Asian markets mostly trading flat. The stock markets in Taiwan, Hong Kong and South Korea were down by 0.06% to 0.14%. Conversely, China’s Shanghai Composite rallied by 3.11%. European markets too, were trading mixed at the time of press with the FTSE 100, United Kingdom’s benchmark and France’s CAC 40 down by 0.62% and 0.29%. The stock markets in Germany were trading 0.27% higher. Additionally, the Dow Jones Mini Futures were down by 42 points.

The futures and options segment on NSE witnessed volumes worth Rs 11.87 lakh crore against the six month average of Rs 14.49 lakh crore. The biggest gainers on Nifty were Britannia Industries, Wipro, Infosys, Tech Mahindra, and HCL Technologies, up by 5.12%, 4.44%, 4.41%, 4.30%, and 4.21%. The biggest losers on Nifty were Sun Pharma, Cipla, Zee Entertainment, BPCL, and Tata Motors down by 3.9%, 2.15%, 1.72%, 1.68%, and 1.36%. Among the broader markets, Nifty Midcap and Nifty Smallcap were down by 0.96% and 1.15%. Sectorally, the biggest gainer was Nifty IT, Nifty Financial Service, Nifty Bank, Nifty Private Bank, and Nifty PSU Bank.

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