Sensex has surged over 900 points in last six sessions.
Indian markets on Friday extended its gains for sixth consecutive sessions with fresh record highs, led by surge in shares of ITC Ltd and Hindalco Industries Ltd. In last six sessions, Sensex gained 2.5% or 920 points. BSE’s 30-share Sensex rose 288.22 points, or 0.4%, to a fresh record high of 37272.86, while National Stock Exchange’s 50-share Nifty gained 0.63% to all time high of 11,237.45. So far this year, Sensex gained 9% while Nifty advanced 6.7%.
Dhiraj Relli MD & CEO HDFC Securities said, “It’s redeeming to see the Nifty and the Sensex cruising at all-time highs, something we predicted quite early this month. New highs have come about on the back of sustained inflows into mutual funds. This asset class has replaced FIIs as the prime movers of the markets. MF SIPs are handy to absorb the selling pressure by FIIs, who are net sellers in this calendar year.”
He thinks that with the asset under management (AUM) of MFs being less than 12% of our GDP, there is ample room for them to increase. “It is interesting to see retail investors displaying maturity by continuing with their SIPs despite the turmoil in mid and small-cap stocks,” he added.
Vinod Nair, head of research at Geojit Financial Services Ltd, said that better Q1 FY19 results from heavyweights and outperformance of PSU banks, coupled with appreciation in rupee, supported markets. “Additionally, the prospects of consumption story on back of reduction in GST rates and good monsoon is restoring investors confidence in markets,” he added.
ITC Ltd surged nearly 5% after it reported 10% rise in profit to Rs 2,818.68 crore, beating analyst estimates. Gross sales grew 13.5% on-year to Rs 18,171.66 crore. ITC’s emerging non-cigarette consumer goods business turned in a pre-tax profit of Rs 127.76 crore in the June quarter, up 86% over the same period last year. Operating profit from cigarettes in the June quarter grew 8.7% year-on-year to Rs 3,558.39 crore
“ITC stock has under-performed the sector for the last one year. Now with improving growth trajectory, less likelihood of increase in cess on cigarette as the government goes into election in 2018 and strong valuation comfort, we believe that ITC can potentially outperform the sector over the next 6-9 months. We continue to like the stock given favourable risk-reward and reiterate our Buy”, said Jefferies India in a note to its investors.
Hindalco Industries shares surged 6% to Rs 220.35 after the company said its arm Novelis has agreed to buy US aluminium sheet maker Aleris Corp. at an enterprise value of $2.58 billion to create the world’s second-largest aluminium maker.
“The deal may diversify Novelis’ product mix and lift its auto sheet capacity, but could be Rs 16-23/ share value dilutive based on our estimates. We retain our Buy as we believe risk-reward is still positive”, said Jefferies India in a note.
ICICI Bank Ltd rose 0.9% to Rs 288 ahead of its June quarter earnings due later on Friday. According to 17 Bloomberg analyst estimates, the bank may post a net profit of Rs 1,459.20 crore.
The BSE Fast Moving Consumer Goods index and BSE Metal index gained the most, rising 2% and 1.4%, respectively.
Investors are cautious ahead of the Reserve Bank of India’s bi-monthly policy on 1 August. Analyst expects that RBI to hike the policy repo rates by 25 basis points.
Foreign institutional investors have sold nearly $919.10 million worth of equities since January. Domestic institutional investors have infused a net Rs 68,771 crore into equities.