Domestic benchmark equity indices opened with strong gains on Tuesday tracking Asian peers that rallied as market participants mulled corporate earnings as well as the prospect of tightening monetary policy to restrain inflation. Treasury yields and the dollar edged down. In opening trades, Sensex rose 394 points or 0.64% to a new high of 62,159 while the Nifty 50 hit a new peak of 18,604 higher by 127 points or 0.68%.
“Globally markets are either flat or weak on concerns of inflation and a slowing Chinese economy. Global supply chain disruptions and rising commodity prices are slowly feeding into into inflation and this is likely to challenge the Fed thesis of transient inflation. The US 10-year bond yield rising to 1.6% yesterday is a reflection of market’s concern regarding inflation,” said VK Vijayakumar, Cheif investment Strategist at Geojit Financial Services.
But, weakness in global markets is not having any impact on stock prices in India which continued to climb up for the sixth successive day setting fresh records. Valuations, particilarly in some segments, are clearly dangerously high. PEs above 100 are hard to justify, howsoever promising the prospects are. When there is a trend reversal in the market, which is inevitable, such pricey stocks are likely to come under bear hammering. Fundamentally sound stocks like the banking majors are still not overvalued. Valuations and quality should be given adequate importance in these exuberant times, Vijayakumar added.
Barring Nifty FMCG (down 0.10%) all sectoral indices opened in the green on the NSE. Nifty IT index was leading the sectoral pack with gains of 2.10%. Nifty Bank, Nifty Auto, Nifty Realty and Nifty Pharma indices advanced in the range of 0.10-0.90%.
Broader markets mirrored gains in benchmark indices and touched fresh peaks. The BSE MidCap index scaled to a new peak of 27,46 while the BSE SmallCap index hit a new high of 30,406.
Bulls were in charge of the market as 1,703 shares advanced compared to 955 declined and 131 remained unchanged.
Hindustan Unilever, Nestle India, 5paisa Capital, ACC, Consolidated Construction Consortium, DCM Shriram, Heidelbergcement India, ICICI Prudential Life Insurance Company, ICICI Securities, JSW Ispat Special Products, Jubilant Ingrevia, L&T Technology Services, Mastek, Navin Fluorine International, Nelco, Network18 Media & Investments, Oriental Hotels, Rallis India, Rane Brake Lining, Shakti Pumps, Standard Industries, Sonata Software, Tata Steel BSL, and TV18 Broadcast are slated to release their September quarter results today.
Overseas, Asian stocks are trading higher on Tuesday as investors mulled corporate earnings as well as the prospect of tightening monetary policy to restrain inflation.
Minutes from the Reserve Bank of Australia’s October monetary policy meeting showed the RBA expecting the Australian economy to “return to growth in the December quarter and to its pre-Delta path in the second half of 2022.”
In US, the S&P and Nasdaq closed higher on Monday with the biggest boosts from the highest-profile technology and communications companies while investors eyed product news from Apple Inc and appeared optimistic about the third-quarter earnings season.
U.S. industrial production declined in September as supply constraints continued to hinder manufacturing. Output fell almost 1.28% to its lowest level since February, when it fell 3.02%, according to data released Monday by the Federal Reserve.
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