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Podcast | Sensex rallies over 300 points; Nifty scales above 10,500

A strong day for Indian markets supported by short coverings as the S&P BSE Sensex rallied over 300 points and the Nifty50 managed to close above 50-days moving average and 100-DEMA on Thursday.

The Nifty bucked the trend as most of the Asian markets closed mostly lower as investors turned cautious over the fresh trade-related developments between the U.S. and China. However, what might have worked in favour of markets is the US Fed minutes.

The US Federal Reserve’s latest meeting suggested higher inflation may not result in faster interest rate hikes. Most Fed policymakers thought it likely another rate increase would be warranted “soon” if the U.S. economic outlook remains intact, and many participants saw little evidence of general overheating of the labor market, said a Reuters report quoting minutes of the central bank’s last policy meeting showed.

“The market managed to end higher in a volatile trading session, taking cues from dovish Fed minutes and softening of crude oil prices. Besides, the report stating considerable rise in direct tax collection in the last financial year further boosted the sentiment,” Jayant Manglik, President, Religare Broking Ltd told Moneycontrol.

“Initially, IT majors pushed the benchmark higher which later joined by others in the second half. However, pressure remained on the broader front as a result both midcap and smallcap index ended lower,” he said.

Commenting on the market action, Manglik said that it’s too early to call this bounce as a reversal and thus advise waiting for confirmation before jumping into a trade. “Private banks, IT and FMCG counters should be preferred for buying while the further recovery in PSU banks and metal would attract fresh shorts,” he said.

The S&P BSE Sensex closed 318 points higher or 0.93 percent at 34,663.11. It rose to an intraday high of 34,741.46, and a low of 34,367.83.

The Nifty50 rose 83 points or 0.8 percent to close at 10,513. It hit an intraday high of 10,535, and an intraday low of 10,419 in trade today.

Sectorally, the S&P BSE IT index rose 2.4 percent, followed by the S&P BSE telecom index which rose 2.2 percent, and the S&P BSE Metal index closed 1 percent higher.

The S&P BSE oil & gas index closed 1.7 percent lower, followed by the S&P BSE Auto index which ended 1.5 percent down, and the S&P BSE Realty index closed 0.49 percent lower.

The S&P BSE Midcap index 0.24 percent down, while the S&P BSE Smallcap index closed 0.14 percent lower.

Top Sensex gainers include companies like Bharti Airtel (up 4.1 percent), Infosys (up 3.09 percent), TCS (up 3.08 percent), Axis Bank (up 2.7 percent), and Sun Pharma (up 2.2 percent).

Top Sensex losers include companies like Tata Motors (down 6.5 percent), ONGC (down 4.5 percent), Bajaj Auto (down 1.4 percent), Maruti Suzuki (down 1.07 percent) etc. among others.

Stocks in news:

ONGC: Share price of Oil and Natural Gas Corporation (ONGC) slipped 4.5 percent on Thursday as a government to consider levy of tax on oil producers to control the prices of petrol and diesel. The stock slipped 11.4 percent in intraday trade.

The government may levy a windfall tax on oil producers as part of a permanent solution it is working on for moderating the spiraling retail prices of petrol and diesel.

Tata Motors Ltd: Global brokerage firms have slashed their 12-month target price for Tata Motors post its Q4 FY18 earnings. The company, which declared its result post market hours on Wednesday, missed analysts’ expectations with a 50-percent year-on-year fall in its consolidated net profit at Rs 2,176.16 crore.

Reacting to the results, the stock hit a fresh 52-week low of 284.70 on BSE. It closed 6.5 percent lower at Rs 288.95 on Thursday.

Jet Airways Ltd: Jet Airways hit a fresh 52-week low of Rs 376.60 on the BSE after the airliner reported a standalone net loss of Rs 1,036 crore in the March quarter due to rise in oil prices and a weaker rupee. The stock closed 7 percent lower at Rs 391.55.

Nifty IT was up 2.3 percent led by KPIT Tech, Infosys, HCL Tech, Tata Consultancy Services and Tech Mahindra on currency weakness; however, the rupee recovered slightly from its near 18-month low against the USD. The minutes from the Federal Reserve’s 1-2 May meeting eased market concerns that it would raise interest rates more quickly than expected.

The company has registered nearly 300 percent jump in its Q4 net profit at Rs 1,021 crore against Rs 260 crore in the same quarter last fiscal. Meanwhile, profit of the company declined by 19 percent on a sequential basis. The stock closed 5 percent lower at Rs 306.80 on the BSE.

In other news/Global update:

On the global front, crude oil prices fell on expectations that OPEC members will increase production following concerns over supply from Venezuela and Iran. Brent crude futures declined a percent to $79 a barrel.

Asian markets ended mixed amid caution over fresh trade-related developments between the US and China, with Japan’s Nikkei falling 1.11 percent while European markets were trading higher, with France’s CAC and Germany’s DAX up 0.5 percent and 0.2 percent, respectively.

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