The News International Team
Equity benchmarks continued northward journey for the fourth consecutive session on Thursday with the Sensex closing above the 26000-mark (for the first time since July 30) ahead of Prime Minister Narendra Modi’s speech on Independence Day. An improvement in inflation data also helped the market rally.
The 30-share BSE Sensex climbed 184.28 points or 0.71 percent to 26103.23 and the 50-share NSE Nifty advanced 52.15 points or 0.67 percent to 7791.70.
Experts believe the uptrend may continue at least for next two-three years and the investment opportunities will also be huge going ahead.
Harsha Upadhyaya, CIO Equity – Kotak Mutual Fund says there’s a clear uptrend visible in the market. “Especially in the scenario, where the earnings growth is recovering in the market, I think the next 2-3 years are going to be great for equity investments,” he adds.
Prabhat Awasthi, Nomura sees the Sensex at 30,310 by August-end 2015, which offers a potential 20 percent upside from current levels based on conservative 12 percent earnings CAGR for FY14-17.
For the week, the Sensex and Nifty rallied 3 percent after consistent fall in previous two weeks while from last year’s Independence Day to this year, both indices surged 35 percent with the Bank Nifty rising 49 percent.
Investors eagerly await the first speech of Prime Minister Narendra Modi on Independence Day. The government already started announcing news for the day with oil minister Dharmendra Pradhan’s decision (on Wednesday) to cut petrol price by Rs 1.89-2.38/litre. Even sources said the prime minister’s office already set aggressive targets for infrastructure sector for the current financial year 2014-15 – some of them are 3 more international airports, power generation capacity target of 17,830 MW, 20,882 kms of transmission line, 300 km of new rail lines etc.
On the economic data front, WPI inflation in July eased to 5.19 percent , the 5-month low, as against 5.43 percent in previous month and even core inflation improved to 3.32 percent from 3.9 percent during the same period.
Meanwhile, the rupee appreciated by 45 paise to 60.76 a dollar from 61.21 a dollar in previous session.
RBI governor Raghuram Rajan today says the central bank needs substantial forex reserves as a buffer against outflows. “We should encourage manufacturing sector growth and prefer long term capital over short term. We need to alter regulations to encourage business environment,” he adds.
Stocks in Action
Private banks, capital goods, oil & gas, steel, power, auto (four-wheeler) and healthcare stocks saw buying interest.
Gail was the prominent gainer, up 3.8 percent followed by Sesa Sterlite, Tata Motors, Larsen and Toubro, Cipla (ahead of earnings today evening) and Tata Power with 2-2.8 percent.
Shares of ICICI Bank, HDFC Bank, Reliance Industries, Sun Pharma, Axis Bank, NTPC, BHEL and Coal India rallied 1-1.8 percent. ONGC and Tata Steel gained 1-2 percent despite weak set of numbers for the quarter ended June 2014.
However, two-wheeler major Hero Motocorp dropped 2.5 percent after MSCI Inc decided to cut weightage of the stock to 0.62 percent from 1.24 percent in its India Index. However, it raised weightage of Dabur (up 3 percent) to 0.65 percent from 0.32 percent.
Housing finance company HDFC was down 1.44 percent; Bharti Airtel, Hindustan Unilever, Wipro, State Bank of India and Bajaj Auto were marginally in red.
Aluminium major Hindalco Industries slipped 0.8 percent after lower-than-expected earnings in June quarter with net profit falling 31 percent year-on-year due to higher fuel and finance costs.
In the broader space, Lanco Infratech surged 5 percent on selling Udupi Power plant to Adani Power (too up 3 percent) for Rs 6,000 crore. The company will receive about Rs 2,000 crore as cash post this deal and Adani Power will long-time debt of around Rs 4,000 crore.
Advancing shares outnumbered declining ones by a ratio of 1631 to 1281 on the Bombay Stock Exchange.