Sensex, Nifty continue to ride Modi rally, end at record closing highs5 min read . Updated: 27 May 2019, 05:06 PM IST
- Banking, metal and infra stocks lead the rally
- The broader markets also posted strong gains
Indian markets moved higher today, boosted by gains in infra and financial stocks, as cheer over Prime Minister Narendra Modi's return for a second term in office continued to buoy investor sentiment. The Sensex ended 248 points higher at a record closing high of 39,683 while Nifty settled 0.70% higher at 11,924, also a new closing high. Banking, metal and infra stocks led the gains today.
“A clear mandate for BJP implies that the current government policies have resulted in political dividend and hence are likely to be pursued further," Nomura Holdings Inc.’s analyst Saion Mukherjee wrote in a note. "We expect continued focus on infrastructure buildout and the implementation of schemes/projects targeting the less affluent and rural India."
Broader markets also posted strong gains as many analysts expect the midcap and smallcap stocks to outperform from hereon as risk sentiment improves. The BSE midcap index rose 1.1% while smallcap index surged 1.8% in today's rally.
Among the Sensex stocks, Tata Steel surged 5.5% while Yes Bank, NTPC and L&T gained over 3% each. Axis Bank, HDFC Bank, HDFC, and HDFC were among other top gainers in the financials space.
"Nifty extended its prevailing upward bias and ended with decent gains. After a flat start, it gradually inched higher, thanks to buying interest in banking, realty and metal majors. The broader indices too participated in the move and gained over a percent each," said Jayant Manglik, president of retail distribution at Religare Broking.
"With the general elections behind us, the focus would return to earnings, upcoming macroeconomic data and global cues. We advise maintaining positive bias and suggest adding quality counters on dips," he added.
Many pharma shares were under pressure today with Divi's Lab plunging 10% while Lupin fell 2%. (With Bloomberg inputs)
Broader markets hare strong today with BSE midcap index up 1.1% while the smallcap index surged 1.8%. "2018 was a challenging year for small cap stocks as uncertainty across the board led to significant rise in equity risk premium and sharp compression in earnings multiples. As we believe volatility is likely to trend downwards with significant improvement in the political climate, we believe that small caps will be back in focus," Reliance Securities said in a note.
Among the Sensex 30 stocks, Tata Steel surged nearly 6% to be the top gainer. Yes Bank, NTPC, L&T, M&M and HDFC were among the other top gainers
GAIL today recommended the issuance of fully paid up bonus share in the ratio of 1:1. The company also recommended the payment of final dividend of ₹1.77 per share.
Shares of Page Industries today hit a 52-week low after they plunged over 13% to ₹19,111. "After the disappointing results and lack of clarity on recovery, we have cut our EPS forecasts by 18.3%/19.0% for FY20/FY21 respectively. While management is targeting 20% topline growth and 21-22% EBITDA margin, we believe the former is difficult to achieve, particularly as trade liquidity concerns have persisted in the first couple of months in FY20," Motilal Oswal said in a note. The brokerage has maintained neutral rating on the stock with price target of ₹19,740."
SBI, ICICI bank, HDFC Bank, Federal bank, L&T, NCC Limited, JK Cement, JK Lakshmi Cement, HG Infra Engineering and Ahluwalia Contracts are among the top stock picks of Reliance Securities.
"We believe that the government will continue to tread the path of calibrated reforms, fiscal consolidation, infrastructure creation and rural growth. With political and policy uncertainty abating significantly, we believe the market volatility (VIX) will decline. Apart from decline in market volatility, another round of rate cut by RBI is likely. All these factors point towards a higher a market multiple, which is likely to sustain. Considering a higher market multiple of 20x (earlier 18x) on FY20E earnings, we upgrade our December Nifty target to 13,000," the brokerage said.
Shares of ICICI Bank today hit a new high when they rose over 1% to ₹436, following their 5% gain on Friday. ICICI Bank also remains one of the top picks of domestic brokerage Motilal Oswal in the large cap space. (Read: Modi 2.0: Here are top stocks picks from four brokerages)
Shares of L&T today hit a record high when they jumped 2.5% to ₹1,580 in intra-day day. Gautam Duggad, head of research at institutional equities at Motilal Oswal Financial Services, said: "In Modi 2.0 era, we expect the larger economic reforms and social welfare agenda to continue, with a renewed emphasis on infrastructure development (roads, housing and waterways)." L&T is among the top largecap stock picks of Motilal Oswal.
IndiGo shares were trading 1% higher at ₹1,635 ahead of Q4 earnings due later today. InterGlobe Aviation, which runs IndiGo, reported a sharp increase in market share in April. The airline’s share rose 300 basis points month-on-month to 49.9%. A basis point is one-hundredth of a percentage point. (Read: Ahead of March quarter results, IndiGo and SpiceJet are flying high)
Nifty may consolidate in a broader range of 11,500-12,000 in the near term, says Jayant Manglik, President, Religare Broking. "We feel the focus would return to quality midcap and smallcap counters, after a long spell of underperformance. On sectoral front, banking and auto look strong," he said.
Strong gains in some PSU banking stocks like SBI, J&K Bank, Syndicate Bank and Union Bank pushed Nifty PSU Bank index 1.5% higher in early trade today. The Nifty PSU Bank had gained over 5% on Friday on hopes that the strong electoral mandate for the NDA might see the new government accelerating reforms in this space.
Manpasand Beverages slumped to hit 20% lower circuit limit after Manpasand share prices fell to ₹88. Following a raid by the Commissioner of Central GST and Customs, Gujarat-based Manpasand Beverages' managing director (MD) Abhishek Singh and chief financial officer (CFO) Paresh Thakkar have been arrested on allegations of GST fraud. "The Commissioner of Central GST and Customs has carried out search and seizure proceedings at various premises of the Company on May 23, 2019, and further inquiry was conducted on May 24, 2019 at GST Bhavan office of Vadodara.
Mr. Abhishek Singh, Whole Time Director, Mr. Paresh Thakkar, Chief Financial Officer of the Company and Mr. Harshvardhan Singh are under judicial custody of Authority on yesterday, i.e., May 24, 2019. The Company is contesting these allegations in accordance with the due process of law," the company said in a notification to the stock exchanges.
Markets are riding high on optimism after Prime Minister Narendra Modi’s BJP won a decisive mandate in Lok Sabha elections. Gaurav Dua, head of strategy and investments, Sharekhan by BNP Paribas, talks about how he sees markets from hereon.
Sameet Chavan, chief Analyst for technical and derivatives at Angel Broking, said that 11,591– 11,426 zone is now likely to act as a sheet anchor for Nifty. "The focus is now likely to shift on mid and small cap universe as we expect the party to begin after a long underperformance," he added.
Top executives of Gujarat-based Manpasand Beverages including the company's managing director have been arrested on allegations of GST fraud.
According to a BSE filing by the company, the Commissioner of Central GST and Customs carried out search and seizure proceedings at various premises of the company on May 23.