Mar­ket gains for eighth ses­sion

Long­est profit streak since Nov; Sen­sex, Nifty gain 4%

Business Standard - - THE SMART INVESTOR - SAMIE MODAK

The bench­mark in­dices con­tin­ued its win­ning streak for the eighth con­sec­u­tive ses­sion on Mon­day in an­tic­i­pa­tion of a favourable mon­soon. Gains in in­dex heavy­weights such as HDFC and ITC helped the BSE Sen­sex re­cover from an early loss of 293 points to fin­ish the day with gains of 113 points, or 0.33 per cent, to 34,305.43.

The in­dex of 30 blue-chip com­pa­nies has gained on all oc­ca­sions since April 4, when it had ended at 33,019. The broad-based Nifty has gained 400 points, or 3.94 per cent, in the past eight ses­sions. Last time the Sen­sex had gained for eight straight ses­sions was in Novem­ber 2017.

Global mar­kets on Mon­day re­mained sub­dued amid in­vestor cau­tion fol­low­ing US-led mil­i­tary strikes in Syria. “Lin­ger­ing geopo­lit­i­cal con­cerns and weak­ness in In­fosys led to a weak start. How­ever, an­tic­i­pa­tion of good mon­soon and a favourable earn­ings sea­son trig­gered the re­cov­ery,” said Jayant Man­g­lik, pres­i­dent, Reli­gare Broking.

The In­dia Me­te­o­ro­log­i­cal Depart­ment (IMD) on Mon­day said mon­soon this year was likely to be 97 per cent of the 50-year av­er­age. Mon­soon is crit­i­cal to In­dia’s agri­cul­ture-de­pen­dent econ­omy. It also af­fects in­fla­tion.

The fore­cast lifted shares of com­pa­nies de­pen­dent on ru­ral In­dia. Shares of two-wheeler mak­ers Hero Mo­tocorp and Ba­jaj Auto ral­lied 1.8 per cent each, while trac­tor man­u­fac­turer Mahin­dra & Mahin­dra gained 1.7 per cent.

Among the losers were Tata Mo­tors, which de­clined 5 per cent, fol­lowed by In­fosys, which fell over 3 per cent. Tata Mo­tors’ scrip took a hit af­ter its Bri­tish sub­sidiary Jaguar Land Rover (JLR) said it would cut jobs amid lower sales. Shares of In­fosys de­clined af­ter it low­ered the op­er­at­ing mar­gins guid­ance for this fis­cal year.

Both for­eign and do­mes­tic in­sti­tu­tional in­vestors were net sell­ers on Mon­day to the tune of ~3,081 mil­lion and ~290 mil­lion, re­spec­tively, ac­cord­ing to pro­vi­sional data. The mar­ket breadth re­mained mixed, with 1,463 stocks de­clin­ing and 1,211 ad­vanc­ing on the BSE.

“Global fac­tors may con­tinue to in­flu­ence the mar­ket but earn­ings and other lo­cal fac­tors have be­come cru­cial for any di­rec­tional move. The pace of rise in the in­dex would be grad­ual from here,” said Man­g­lik.

The gains in the past eight ses­sions have sur­prised many as they have come amid an in­crease in global crude oil prices and weak­ness in the ru­pee. The up­move, how­ever, has come on the back of a near 10 per cent fall in the bench­mark in­dices in Fe­bru­ary and March.

The mar­ket had come off from its record

high in Jan­uary 2018 due to sev­eral fac­tors such as a rise in US bond yields, po­lit­i­cal un­cer­tainty, es­ca­lat­ing geopo­lit­i­cal ten­sions, ris­ing crude oil prices and scams in the bank­ing sec­tor.

Elara Cap­i­tal, in a note last week, said a few of these con­cerns still per­sist and would con­tinue to weigh on the mar­ket. Besides, a weak March quar­ter earn­ings out­look for the bank­ing sec­tor and a drop in eq­uity mu­tual fund in­flows are other woes.

“We ex­pect the eq­uity mar­ket to re­main range-bound and the stocks with fun­da­men­tal traits men­tioned in are likely to out­per­form,” the bro­ker­age said.

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