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Nachiket Kelkar
Nachiket Kelkar

EQUITY MARKETS

Markets surge amid global rally; Nifty hits 9,300 for first time

1-aug24 (File) (Representational image) BSE | Agencies

Equity markets hit a record high on Tuesday, with the National Stock Exchange's benchmark Nifty 50 index touching 9,300 level for the first time, as a global rally and strong results back home from companies like Reliance Industries lifted market sentiments.

The BSE Sensex surged 287 points or 1 per cent to close at 29,943.24. The NSE Nifty 50 gained 89 points or 1 per cent to end the session at 9,306.60.

Across the globe, investors heaved a sigh of relief amid a relief rally triggered by centrist leader Emmanuel Macron's first round win in the French presidential polls and opinion polls suggesting he would easily defeat the far-right leader Marine Le Pen in the run-off on May 7. Speculation is also building up on imminent moves by President Donald Trump to reform the US tax system.

On Tuesday, among major Asian markets, Japan's Nikkei jumped 200 points, while Hong Kong's Hang Seng rallied 316 points. Across Europe, London's FTSE, France's CAC40 and AEX Amsterdam index among other markets were trading in the green. On Monday, The Dow Jones Industrial Average had also surged 216 points.

Domestically, better-than-expected earnings by companies by Reliance Industries and HDFC Bank have also cheered investors.

RIL closed up 1.1 per cent on Tuesday after the company beat street expectations with fourth quarter net profit growth of 13 per cent to Rs 8,151 crore, while revenue rose 38 per cent from a year ago to Rs 74,598 crore.

Earlier, HDFC Bank too had reported earnings better than market expectations.

Analysts say these results will definitely boost sentiments of investors, given that corporate earnings have been disappointing for many quarters now.

“Buoyant global markets post French elections, strong liquidity and good start to fourth quarter results season has ensured positive market sentiments,” said Gautam Duggad, head of research at Motilal Oswal Securities.

However, there is also a concern building up over expensive valuations the benchmark indices are trading at.

“Going forward, sustenance of positive results momentum and more importantly management commentary about fiscal 2018 earnings recovery prospects will be a key thing to monitor as valuations do not offer much comfort from hereon,” Duggad added.

In April, FIIs pumped in Rs 2,156 crore in equity market, taking their investment so far in calendar 2017 to Rs 41,787 crore. Domestic funds too have bought stocks worth over Rs 14,000 crore since January. Buoyed by the liquidity, the BSE Sensex is up 2.4 per cent in the last one month. Several mid-cap and small-cap stocks have seen a sharper rally; the BSE Midcap index is up 7 per cent and the smallcap index has risen 9 per cent in the past month.

Several analysts have raised their valuation concerns in recent weeks.

“We can only hope that the current excitement about the Indian market and especially the mid-cap and small-cap stocks reflects the market's confidence in a sharp recovery in economic activity and earnings and not simply expectations that the market and underlying stocks will deliver positive returns simply based on liquidity and increased participation by retail investors into the market,” Sanjeev Prasad, co-head of Kotak Institutional Equities said recently.

On Tuesday, among top midcap gainers, Indian Bank accelerated more than 9 per cent after the state-owned lender reported a three-fold rise in quarterly profit. Biocon also jumped near 10 per cent on board's plans of a bonus issue.

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Topics : #Equity market

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