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The surge in earnings has been led by financials, metals & mining and oil & gas.
Domestic benchmark equity indices opened with decent gains on Monday tracking Asian peers that are trading higher as Chinese economic data beat analysts’ expectations. Treasuries also were steady, bringing some respite from volatility caused by high inflation and the prospect of tighter monetary policy. In opening trades Sensex zoomed 276 points or 0.46% to 60,963 while the Nifty was trading near the 18,200 mark at 18,188 advancing by 85 points or 0.47%.
“Partly justifying the market rally, corporate earnings have grown by 46 % YoY in Q2. The surge in earnings has been led by financials, metals & mining and oil & gas. But, even discounting this impressive performance by India Inc, the market is over-valued and, therefore, corrections are due.,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Q3 is likely to be subdued compared to Q2. Headwinds from rising CPI inflation (4.48% in October) and a decline in IIP to 3.1% in September are likely to impact earnings in many segments in Q3 and Q4. The global headwind for markets is likely to come from a sooner-than-expected rate hike by the Fed by, say, mid-2022 contrary to market expectation of a rate lift-off starting early 2023, Vijayakumar added.
Top gainers & losers
Top gainers & losers on the Sensex.
Sectoral strand
All sectoral indices opened in green on the NSE. Nifty Bank stood tallest among sectoral indices with gains of 0.75%. While Nifty Metal, Nifty Realty, Nifty FMCG, Nifty IT, Nifty Pharma and Nifty Auto indices were up in the range of 0.03-0.69%.
The volatility gauge India VIX cooled off by 2.46% to sub 15 levels at 14.84.
Broader markets
The broader markets were also trading with strong gains. BSE MidCap index was quoting at 26,487 higher by 118 points or 0.45%. While BSE SmallCap index advanced 95 points or 0.33% at 29,328.
The market breadth favoured the bulls as 1,585 shares advanced compared to 786 declining and 137 remained unchanged.
Earnings today
Advance Syntex, Binani Industries, Containerway International, East India Securities, Esaar (India), GCCL Construction, Gold Line International, GV Films, Hemadri Cements, Integra Capital Management, Jai Balaji Industries, Kotia Enterprises, KSS, MSP Steel & Power, Newtime Infrastructure, Parle Industries, PB Films, PG Foils, Rajesh Exports, Ravi Kumar Distilleries, Rollatainers, Samtel India, Silver Oak (India), Tinplate Company of India and Simmonds Marshall and others will release their quarterly earnings today.
Global markets
Overseas, Asian stocks are trading higher on Monday as investors look ahead to Chinese economic data releases due out later today. China is set to release a slew of economic data, including industrial production and retail sales for October later today.
The Japanese economy contracted at an annualised rate of 3% in July-September from the previous quarter, government data showed on Monday, posting the first decline in two quarters as resurgent coronavirus infections hurt consumer spending.
Wall Street stocks closed higher on Friday, with market-leading growth shares kick-starting indexes’ climb as investors looked past disappointing U.S. economic data.