Four factors why Sensex, Nifty rose to record highs in early trade today
While the Sensex hit an all time high of 38,402 rising 124 points from yesterday's close, the Nifty rose 30 points to new peak of 11,581 after climbing 30 points from its previous close.
The Sensex and Nifty scaled fresh peaks in early trade today on gains in large cap stocks such as Bajaj Auto, ITC, Asian Paints and Adani Ports. While the Sensex hit an all time high of 38,402 rising 124 points from yesterday's close, the Nifty rose 30 points to new peak of 11,581 after climbing 30 points from its previous close. The Sensex has gained over 12% since the beginning of this year. The Nifty too has not been far behind. The index is up nearly 10% since the beginning of 2018. Here's a look at why Sensex, Nifty hit to all time highs in trade today.
Strong recovery in rupee
The rupee has been constantly gaining lost ground this week after it touched its life-time low of 70.40 and closed at record low of 70.15 level hit by the Turkish currency crisis last week.
The rupee rebounded 33 paise to 69.82 level against the dollar yesterday. Today, the Indian currency opened higher by 17 paise at 69.65 compared to Monday's close of 69.82 level. The rupee has gained 79 paise from its all time lows in just two sessions. The currency further rose to 69.61 against the dollar in midday session boosting sentiment in the equity market.
FIIs get bullish
FIIs became bullish on markets this month by pouring over Rs 5,853 crore into the Indian market on better show in Q1 corporate earnings and lower crude oil prices. During April to June, FIIs pulled out Rs 61,000 crore from Indian markets, according to a PTI report.
June quarter earnings shine
June quarter earnings of India Inc came out strong which buoyed market sentiment.
India Inc witnessed a healthy 22 per cent revenue growth in the June quarter, according to a report by Icra. An analysis of 173 companies showed consumer-oriented sectors such as auto, FMCG, consumer durables and airlines as well as commodity linked sectors like cement, iron and steel and oil and gas, saw stronger sales growth in the June quarter.
"On an average, the corporate sector has reported a 22 per cent rise in revenue but on flat margins," Icra said in a report.
While pharma grew 20.8 per cent, supported by strong domestic sales and base effect, IT reported a healthy 12.9 per cent boosted by strong performance in their digital offerings and partial recovery in the BFSI segment.
Brokerage Motilal Oswal in an earnings review report said, "The proportion of companies reporting 30% plus profit after tax growth (at 41% of MOSL Universe) is the highest since March 10, partly aided by the low base of 1QFY18 in several consumption-oriented sectors. Aggregate sales of MOSL Universe grew 22.9% YoY, at a 25 quarter high (estimate of 22.2%), EBITDA rose 19.3% YoY (estimate of plus 23.5%) and PAT increased 13.8% YoY (estimate of plus 25.2%).
Performance was disproportionately impacted by corporate banks. Excluding corporate banks, MOSL Universe sales/EBITDA/PAT grew 23.0%/21.1%/26.7% against estimate of 22.6%/24.1%/31.3%. Of the 19 sectors we track, two/eight /nine posted profits that were above/in -line/below our estimates. Capital goods and Retail universe posted profits ahead of expectations, while Autos, Banks, Life Insurance, Healthcare and Utilities missed expectations."
US-China trade talks
The news of US, China trade talks fuelled expectations among market participants on the global stage that the two nations might find a way to resolve an escalating tariff war which could improve global market sentiments.
The lower level trade talks set to take place through Tuesday and Wednesday this week led to improvement in market sentiment.
Investors are closely watching for any prospects for an end to the trade dispute between the US and China. The costly, dueling tariffs between them are causing uncertainty in global markets. The positive sentiment in world markets helped Indian markets scaling fresh all time highs in trade today. Asian markets were trading mixed.
The S&P 500 rose 6.92 points, or 0.2 percent, to 2,857.05. The Dow Jones Industrial Average climbed 89.37 points, or 0.3 percent, to 25,758.69. The Nasdaq composite recovered from a morning slide, adding 4.68 points, or 0.1 percent, to 7,821.01. The Russell 2000 index of smaller-company stocks also rebounded, picking up 5.75 points, or 0.3 percent, to 1,698.69.