Markets march higher for 3rd day; TCS zooms 7% on buyback plan

Equities rallied on Monday with technology stocks soaring after Tata Consultancy Services announced it was considering a buyback of shares. The Nifty reclaimed its 11,500 mark gaining 86.4 points (0.76%) to close at 11,503.35 driven up by the Nifty IT which outperformed the markets to go up by 3.47% and close at 20,809. The Sensex put on 276.65 points (0.71%) to close at 38,973.7.

Foreign portfolio investors(FPI) who sold equities worth $766.9 million in September bought $253.7 million worth of equities on October 1. The outflows in September were triggered by the rising novel coronavirus cases globally, denting hopes of a quick economic recovery.

TCS which contributed the most to the market’s movement on Monday rallied by 7.5% to close at Rs 2,713.95. The tech giant became the only other company after Reliance Industries to cross Rs 10 lakh crore in market capitalisation; the closing market cap was Rs 10.18 lakh crore. The company announced that the board will meet later this week to consider a share buy back proposal.

IT shares were up ahead of the September quarter results, which according to brokerages are expected to be robust. Kotak Institutional Equities said, “We expect a robust September 2020 quarter for IT services companies led by steady demand in large verticals and negligible supply-side impact, an aspect that impacted June 2020 quarter revenues and margins. We expect year-on-year increase and stable margins on a sequential basis. The deal pipeline is strong across companies although accompanied by greater scrutiny in select large deals. In our view, IT services spending is set to accelerate, driving elevated growth for well-positioned service providers and multiple expansions.”

Global cues were also strong on Monday on hopes that there would be progress on talks of the US fiscal stimulus. Additionally, US President Trump’s health was said to be improving which increased the risk appetite of investors. Markets globally were tracking the rise in the Dow Jones mini futures up by 196 points at the time of press.

The Asian markets in Taiwan, South Korea and Hong Kong closed up between 0.26% to 1.32%. The European markets in Germany, France and the United Kingdom were trading in the green, up between 0.69% to 0.8%.

Jefferies noted: “Nifty was up 3.3% last week. It was the best performing market in the region, outperforming EMs by 1.2%. Banking and autos were the top gainers while energy and FMCG were the top losers.” The futures and options segment saw volumes worth Rs 15.62 lakh crore and the cash market saw a turnover worth Rs 51,739.2 crore compared with the six month average of Rs 15.53 lakh crore and Rs 53,128 crore, respectively.