Thursday, 13 April 2017

ITC, Infosys help Sensex gain 213 pts; Bank and Midcap at new closing high, up 1%

Midcaps extended rally Tuesday as investors started focusing on quarterly earnings season that will kick off by Infosys on April 13.

After three-day of consolidation with a negative bias, equity benchmarks gained strength despite mixed global cues Tuesday as investors started focusing on quarterly earnings season that will kick off by Infosys on April 13.

The 30-share BSE Sensex was up 212.61 points at 29,788.35 and the 50-share NSE Nifty rose 55.55 points to 9,237, backed by banking & financials, technology and FMCG stocks.

"The market needs sustainability above 9300 for further up move. Earnings season is also about to kick-start shortly thus we advise maintaining cautiously positive approach," Jayant Manglik, President of Religare Securities says.

The broader markets continued to outperform benchmarks, with the Nifty Midcap stood at record closing high with 1 percent gains. In fact, it has not only outperformed in last 12 months but also in the last five years.

Kotak Institutional Equities says midcaps have been consistent in multiplying investors' wealth over a period of time and are now trading in a bubble phase.

"We find valuations of several midcap stocks in our coverage universe very high. In fact, it would not be wrong to say that some are in the 'bubble' phase with the market extrapolating strong growth and high returns in perpetuity," it says.

Bank Nifty also participated in today's rally, gaining 1 percent on hopes of strong revival in fourth quarter earnings. Asset quality is also likely to improve further. All Nifty bank stocks except IndusInd Bank closed in the green.

ICICI Bank and SBI gained 1.9 percent and 1.6 percent, respectively. Yes Bank hit fresh record high, up nearly a percent. Rally in midcap banks also continued as Karnataka Bank and DCB Bank gained 10 percent each.

Infosys was up 1.5 percent ahead of March quarter earnings and commentary for FY18. A CNBC-TV18 poll expects a 3.7 percent decline in profit and 0.2 percent degrowth in dollar revenue on sequential basis.

ITC was the leading gainer among Sensex stocks, up more than 3 percent followed by L&T, Asian Paints and Bharti Airtel.

However, Adani Ports was biggest loser, down nearly 5 percent. Reliance Industries and Tata Motors also added some pressure, falling half a percent.

In broader space, Adani Power share price tanked 16 percent as investors turned cautious after Supreme Court set aside power regulator's order of higher tariff for the company and Tata Power (which was down 2 percent).

Market breadth was in a favour of advances with advance-decline ratio of 3:2.

Asian and European markets were mixed amid rising tensions in the Middle East and political uncertainty in Europe.

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