Sensex rises 409 points on firm global cues; Q1 earnings in focus

Mumbai: Firm cues from world equities and Prime Minister Narendra Modi’s comments that the economy has started seeing green shoots of recovery boosted the investor sentiment on Street, driving benchmark indices higher after a one-day hiatus, with financial stocks and Reliance Industries (RIL) spearheading the rally.

Another record spike in new coronavirus cases, however, continued to be a cause of worry.

“In spite of rising concerns regarding the spread of the virus infections, markets continued to focus on the path to recovery in the economy. With liquidity giving adequate support, investors are looking towards the start of the earnings season,” said Vinod Nair, Head of Research at Geojit Financial Services at Geojit Financial Services.

The focus now shifts to June quarter corporate earnings, and specifically the commentary on outlook.

“With the lockdown and the economic activity coming to a standstill in the last quarter, investors will be looking forward to the earnings commentary, to understand the outlook,” said Nair.

Sensex rose 409 points to close at 36,738 while Nifty climbed 108 points to shut shop at 10,813. The market barometers have logged gains in six of the last seven sessions.

On Thursday, as many as 22 of 30 Sensex stocks closed higher. Mortgage lender Housing Development Finance Corporation (HDFC) was the top contributor to Sensex’s gains as it advanced 3.05 per cent. Peer lenders HDFC Bank and Bajaj Finance climbed 1.47 per cent and 3.93 per cent, respectively.
Oil-to-telecom conglomerate RIL resumed its uptrend and rose 1.52 per cent.

Even as the main indices jumped more than a per cent, the market breadth only marginally favoured the gainers. Advancing shares beat declining ones in the ratio of 1.1:1 on the BSE.

The broader markets underperformed, with BSE midcap and smallcap indices rising 0.07 per cent and 0.49 per cent, respectively.

BSE Metal index was the top gainer among sectoral indices as it advanced 2.13 per cent. It was followed by BSE Finance that rose 1.59 per cent. BSE FMCG index fell the most, down 0.35 per cent.

Bharat Heavy Electricals (BHEL) rose 1.94 per cent after the state-run company said it has successfully commissioned a 1.7 MW solar photovoltaic (PV) plant at Bina in Madhya Pradesh for the Indian Railways.

Praj Industries gained 3.59 per cent as the company announced its foray into the global renewable chemicals and materials (RCM) industry.

Private lender YES Bank ended 2.11 per cent higher after the company said it has filed an offer document to raise up to Rs 15,000 crore through issuance of fresh equity shares in its further public offering (FPO).

Top software exporter Tata Consultancy Services (TCS) dropped 0.60 per cent ahead of its June quarter earnings announcement later today.

Foreign institutional investors (FIIs) who made a comeback to Indian equities in June, have turned cautious on them for now. They have been net sellers in three of the first five sessions of July, offloading a total of $342.62 million of shares for the month to date.

Markets at a glance

• Sensex, Nifty rise in six out of seven sessions
• Sensex gains 1.12% or 409 points to close at 36,738
• Nifty gains 1.01% or 108 points to close at 10,813
• 22 of 30 Sensex stocks close higher
• Top Sensex gainers: Bajaj Fin up 3.93%, SBI 3.72%, Tata Steel 3.05%
• Top Sensex losers: ONGC down 1.66%, TechM 1.22%, Maruti 0.66%
• Market breadth marginally positive; advance-decline ratio 1.1:1
• Broader makrets underperform; BSE Midcap up 0.07%, smallcap 0.49%
• BSE Metal top sectoral gainer, up 2.13%; Hindalco up 6.90%, Jindal Steel 4.86%
• BSE Finance up 1.59%; IIFL Sec up 10.80%, Motilal Oswal 5.41%
• BSE FMCG index top loser, down 0.35%
• Shree Renuka Sugars, Future Consumer top losers in FMCG pack
• BHEL rose 1.94% on commissioning plant for Indian Railways
• Praj inds jumps 3.59& on foray into global RCM
• YES Bank rises 2.11% on fund-raising announcement
• TCS drops 0.60% ahead of Q1 results

Who moved my market

• Firm world stocks

Surging Chinese stocks led Asia’s equity markets higher on Thursday, as investors looked past Sino-US tension and renewed coronavirus lockdowns and hoped stimulus washing through the world economy finds its way to company earnings Reuters reported. European stocks rose on Thursday as software giant SAP signalled a rebound in its business from a coronavirus hit and China’s stock markets extended a rally, supporting risk sentiment in the continent, a Reuters report said. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8 per cent and touched a 20-week high, while the broader European equities index rose 0.3 per cent.

• PM Modi’s assurance

Prime Minister Narendra Modi on Thursday said Indian economy has started seeing "green shoots" of recovery and that the country remains one of the most open economies in the world. While speaking at India Global Week 2020, he said that in these times when the world is battling the COVID-19 pandemic, it is natural to talk about revival and there is faith that the story of global revival will have India playing a leading role.

• Another record surge in Covid cases

A record 24,879 new cases have taken the total confirmed cases of Covid-19 in India to 7,67,296. Out of the total number of cases, 2,69,789 are still active. The death toll has also increased to 21,129, after 487 deaths were reported in the last one day.

What to watch out for

• The continuous record surge in new coronavirus cases is a major cause of worry.

• The movement of global markets will be closely watched as the domestic market tends to take cues.

• Progress on a domestic as well as overseas vaccine for Covid-19 treatment will be closely watched.

• The June quarter corporate earnings will provide a better picture of the damage caused by the pandemic-induced lockdown.

• The data of Index of Industrial Production (IIP), which is scheduled to be released on July 10 will be in focus.