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Markets are booming to a new level in anticipation of better Q2FY21 results (MINT_PRINT)
Markets are booming to a new level in anticipation of better Q2FY21 results (MINT_PRINT)

Markets at a seven-month high as macro data boosts optimism

Impressive auto sales numbers and services PMI data from Sep also improved investor sentiment

Indian markets rallied more than 1% to end at a seven-month high on Tuesday as expectations of better September quarter corporate earnings, improvement in domestic economic macro data, and a positive scenario in the global markets improved investor sentiment.

The appointment of new external members of the Reserve Bank of India’s (RBI’s) monetary policy committee (MPC) also raised hopes of an interest rate cut by the central bank in the upcoming review.

The BSE Sensex ended at 39,574.57, adding 600.87 points or 1.54%. The Nifty was at 11,662.40, climbing 159.05 points or 1.38%.

Markets in other countries of the Asia-Pacific region closed higher as well. Asian markets ended on a strong note after US President Donald Trump was discharged from hospital following treatment for covid-19, while prospects for a fresh US stimulus package appeared to brighten, analysts said.

“On the domestic side, the lowest number of covid-19 cases being reported in India over the last 42 days spurred sentiment. Moreover, sentiment turned buoyant following positive management commentary for Q2 earnings. In addition, the impressive September auto monthly sales volume, gradual reopening of the lockdown, and the strong domestic economy data also provided support to the market," said Siddhartha Khemka, head, retail research, Motilal Oswal Financial Services.

The September quarter earnings season will kick-start with TCS reporting the quarter’s performance on Wednesday. Analysts expect TCS to see firm Q2 results based on the healthy deal pipeline and cut in discretionary spends.

“Markets are booming to a new level in anticipation of better Q2FY21 results, clear improvement in domestic economic data, and improvement in the global market. The IT and banking sectors will be in focus in the coming weeks. Banks are showing healthy deposits and advance growth, with signs of recovery in growth to pre-covid levels, while a positive Supreme Court verdict is also expected next week regarding the moratorium," said Vinod Nair, head of research, Geojit Financial Services.

Meanwhile, economists expect a dovish tilt to the MPC’s inflation commentary.

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