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regular-article-logo Friday, 01 March 2024

Stocks soar on Q3 hopes

After opening lower at 48037.63, the gauge hit an intra-day low of 47903.38

Our Special Correspondent Mumbai Published 06.01.21, 02:30 AM
The 30-share Sensex saw some volatility as it oscillated to news about rising coronavirus infections overseas and positive sentiment back home with companies set to announce their third quarter results.

The 30-share Sensex saw some volatility as it oscillated to news about rising coronavirus infections overseas and positive sentiment back home with companies set to announce their third quarter results. File picture

Benchmark indices on Tuesday settled at lifetime highs on hopes of encouraging performance from corporate India with the results season kicking off this Friday. The gains in stock prices overcame the lacklustre global cues as Britain announced a fresh lockdown.

The 30-share Sensex saw some volatility as it oscillated to news about rising coronavirus infections overseas and positive sentiment back home with companies set to announce their third quarter results.

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After opening lower at 48037.63, the gauge hit an intra-day low of 47903.38. However, it staged a smart recovery to touch an all-time high of 48486.24 during the day. The index later ended at 260.98 points or 0.54 per cent higher at 48437.78, a new closing high. This is for the tenth straight session that the Sensex has ended in the green of which it has closed at record highs in seven sessions.

Likewise, the broader NSE Nifty rose 66.60 points or 0.47 per cent to settle at a new peak of 14199.50. It scaled a record intra-day high of 14215.60.

The gains came as investors remained confident that the third quarter ended December 31, 2020 will reflect the improved performance of India Inc. They are also optimistic that the commentary on the road ahead will be positive. Tata Consultancy Services will declare its numbers on January 8.

“We argue Indian IT companies are poised to turn in the best third quarter in a decade given the highest-ever order books, marked revenue acceleration, margin expansion and ongoing outlook upgrades...We expect robust commentaries, record deal-wins and guidance upgrades by all. And we argue that upward guidance revisions by Indian IT companies, which set in two quarters ago, will be followed by upgrades in consensus forecasts for quarters to come,’’ analysts at Edelweiss said in a note.

Apart from IT services, the earnings from other sectors such as automobiles, metals, consumer durables, telecom are expected to reflect the recovery in the domestic economy from the lows in the first quarter where it contracted a record 23.9 per cent.

Axis Bank was the top gainer in the Sensex pack, rallying 6.31 per cent, followed by HDFC, IndusInd Bank, TCS, Asian Paints, HCL Tech, Titan and ICICI Bank.

However, ONGC, Bajaj Finance, NTPC, M&M and Reliance Industries were among the laggards, tumbling up to 2.06 per cent.

“Based on the historical standards of valuation today, equities are at a rich level. But these levels are easily extended or cannot be comparable due to one-time economic euphoria from early vaccination, high double digit earnings growth and high liquidity in the market. The ongoing Indian rally is supported by the anticipation of Q3 result,” Vinod Nair, head of research at Geojit Financial services, said.

Global markets were mixed after Britain announced a fresh nationwide coronavirus lockdown, while Wall Street was under selling pressure in the overnight session. Elsewhere in Asia, bourses in Shanghai, Seoul and Hong Kong ended on a positive note, while Tokyo was in the red. Stock exchanges in Europe were trading mixed in early deals.

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