Sensex up 134 pts, hits 8-month high HSBC ‘overweight’ on India, raises 2016 Sensex target to 28,500

STOCKSruledhigherforthe sixth session on Monday as theSensexaddednearly134 points to end at 27,279 — a fresh over 8-month high — as monsoon pickedupandtheglobalrecovery post-Brexit brought cheer.

The rainfall deficit shrank to 6%, sharply down from 18% in the first week of June, after substantial rains over the weekend.

Themoodwasalsodecidedly upbeat after it emerged that central bankers across the globe are stepping up stimulus measures to offset concerns from the shock Brexit referendum, which sent global stocks higher.

Market remained in the green territory throughout. The 30-share Sensex ended higher by 133.85 points, or 0.49%, at 27,278.76 -- its highest closing since October 26 last year. As many as 19 stocks gained. The Sensex added 747.20 points in the past five sessions.

The Nifty ended up 42.35 points, or 0.51%, at 8,370.70 -- its highestlevelsinceAugust20last year. Widespread gains built up mood, with realty, PSU, metal, oil & gas and capital goods stocks merging as heavy hitters.

Investors went for the kill buoyed by optimism over increased chances of GST becoming a reality with changed equationsintheRajyaSabha,thegovernment's approval to the 7th Pay panel award and a clutch of economy-boosting reforms, including relaxation of FDI rules. 192 stocks hit 52-week high

Nearly 200 stocks hit their one-year high level on BSE on Monday supported by a rally in the broader market. A total of 192 firms surged to their 52week high mark, including BPCL, DLF, GAIL, Godrej Consumer Products Ltd, Hero MotoCorp, IOC, M&M, NHPC, NTPC, Power Grid Corporation of India and Yes Bank.

Adani Ports came out on top adding 4.23% after the company'sboardonSaturdayapproved plans to explore acquisition of business support services provider TM Harbour Services.

Tata Motors too was in the limelight by rising 2.40% after the company reported an 8% growth in June sales.

Others that had a good day in office included ONGC (3.43%), ICICI Bank (2.97%), Coal India (2.37%), L&T (1.59%), SBI (1.46%) and RIL (1.34%).

ITC, Dr Reddy's, Hindustan Unilever, Bajaj Auto, NTPC, Asian Paints, TCS and HDFC Bank lost due to profit booking.

The BSE realty index jumped the most, up 2.20%, followed by PSU at 1.79%, metal by 1.67%, oil & gas by 1.56% and capital goods by 1.26%.

“Both the Sensex and the Nifty continue to scale new highs for the year, closing with gains of ~0.5% for the day. Positive market sentiment was given a fillip after monsoon picked up in India over the weekend,” said Shreyash Devalkar, fund manager – equities, BNP Paribas Mutual Fund.

The market breadth remained positive as 1,724 stocks ended in the green, 1,016 closed in the red and 145 stayed flat. The total turnover fell to approximately Rs 3,010 crore, from Rs 3,336.56 crore on Friday. PTI New Delhi, July 4: Global brokerage firm HSBC on Monday upgraded India to the‘overweight’status,citing improving domestic indicators and more realistic earnings expectations.

It has also raised its Sensex target for 2016-end to 28,500 from 26,000.

“We move India to overweight (from neutral),” HSBC said in a research note, adding that “India is a relatively defensive market (least driven by global factors) in an increasingly uncertain investment world”.

According to HSBC, domestically, India is one of the most convincing growth stories. GDP growth is accelerating, Budget deficit has narrowed, high frequency data points are picking up, and the recent earnings season points to improvement in demand.

“We believe India equities deserve to trade at higher multiples than the historical average due to several reasons – improving macro position, relatively defensive characteristics in times of increasing risks to global growth, and decline in cost of equity,” HSBC said.

The report noted that after a slow start in sowing, most crop categories with the exception of cotton and oilseeds are showing strong progress and this should help contain food inflation to some extent as well as increase rural purchasing power and income.

Moreover, implementation of the 7th Pay Commission's recommendations is seen to act as another catalyst for consumption in India.

“We prefer consumption to investment in India as there are specific catalysts for consumption as we mentioned, while private capex, an important component of investment, remains muted,” HSBC said. PTI