Spurt in IT stocks lifts markets to 4-month high

The benchmark Sensex was up by 429.25 points or 1.21% to close at 35,843.7.

India’s stock markets rallied on Thursday for the second straight session, closing at their four month highs, tracking global markets which were up due to a breakthrough in Covid-19 vaccine trials. The benchmarks were led by IT stocks and ended the day higher by more than 1%.

The 50-share index Nifty crossed the 10,400 mark which was a major hurdle, the benchmark rose by 121.65 points or 1.17% to close at 10,551.7. The benchmark Sensex was up by 429.25 points or 1.21% to close at 35,843.7.  The benchmarks globally were rallying after the US based pharmaceutical company Pfizer said the phase one trial of the Covid-19 vaccine it was developing with BioNTech, a German biotech firm, was found to be well-tolerated in early stage human trials. Additionally, Oxford University also reported that its Covid-19 vaccine was on the right track.

Asian markets closed higher with Hang Seng, Hong Kong’s benchmark, rising as much as 2.85%. Stock markets in Taiwan, South Korea and China were up between 0.8% to 2.13%. The European indices too, were rallying at the time of press with the stock markets in the United Kingdom, France, and Germany up by 0.6% to 1.9%. Dow Jones Mini futures were also up by 251 points pre-empting a positive session in the US markets which were likely to react to the jobs data due to be released on Thursday.

Siddhartha Khemka, head- retail research, Motilal Oswal Financial Services, said, “While there are concerns over rising coronavirus cases and chances of second round of lockdown, market seems to be factoring in positive macroeconomic data, onset of timely monsoon and initial success in vaccine development. Investors would also keenly watch out for the US employment data, which will come out later on Thursday. Though the near term momentum may continue, traders should look at booking profits at regular intervals.”

On Thursday’s weekly expiry, the Indian markets witnessed strong volumes with the turnover in the futures and options segment standing at Rs 34.58 lakh crore against the six month average of Rs 14.49 lakh crore. According to Shrikant Chouhan, executive vice president – equity technical research, Kotak Securities, support from the global markets and fall in the dollar helped emerging markets to trade higher. “With the Nifty closing above 10550, the Nifty has shifted the base from 10200 and 10400 levels. On the higher side, Nifty has the scope to move up to 10750 with a minor hurdle at 10680,” said Shrikant Chouhan. The rupee closed at a three month high trading at 74.88 against the dollar.

According to a report by Credit Suisse, more companies in the Nifty beat the estimates than missed it in the March 2020 quarter. “The weakness in March 2020 results was well flagged by the time it was reported. 47% of Nifty companies beat estimates, and close to 23% missed compared to historical trends. 4Q was an abnormal quarter on this measure,” said Credit Suisse in its report. The brokerage mentioned that it was overweight on IT, banks and staples, and underweight on discretionary, NBFCs and industrials. “We find FY21 assumptions to be optimistic, as the virus is still spreading, it would drag down FY22 as well,” said Credit Suisse.

Foreign Portfolio Investors (FPIs) were sellers on Thursday offloading stocks worth $74.34 million, according to the provisional data on the exchanges. Domestic institutional investors bought stocks worth $121.34 million. The FPIs have been sellers since the last two trading sessions. FPIs in June were fierce buyers with their inflows standing at $2.7 billion in total.

The biggest gainers on Nifty were Mahindra and Mahindra, Hero Motocorp, Cipla, Titan, and HCL Technologies. Shares of Mahindra and Mahindra as well as Hero Motocorp rallied by 6.42% and 5.2%. The stocks of Cipla and Titan, both were up by 3.8% followed by HCL Technologies which was up by 3.48%. The biggest losers were Axis Bank, UPL, Vedanta, Hindustan Unilever, and Eicher Motors, down by 1.95%, 1%, 0.8%, 0.62%, and 0.47%. Among the broader markets, Nifty Midcap and Nifty Smallcap were up by 1.3% and 0.89%. Sectorally, the biggest gainers were Nifty Auto, Nifty IT, Nifty Metal, Nifty Pharma, and Nifty Financial Service.