Better-Than-Expected Earnings Push Sensex Toward Record High

(Bloomberg) -- Most Indian companies are reporting better than expected results for the quarter ended in September, putting the benchmark S&P BSE Sensex Index within points of an all-time high.

• The Sensex set a record intra-day high on Thursday, rising 0.9% to 40,392,22, before paring its gain to 0.2% by the 3:30 p.m. close in Mumbai
• Fifteen out of the 26 Nifty companies that have reported earnings so far this season have beaten analyst estimates, two have matched and eight have missed, according to Bloomberg data for which enough projections are available

BNP Paribas (Abhiram Eleswarapu)

• The record high for Indian equities is a result of renewed interest from foreign investors, who had sold close to $3.5 billion of shares in the five months preceding October
• Domestically, the 2Q FY20 profits have fared slightly better than estimated, albeit on low expectations
• Earnings helped by improving asset quality at major banks and signs of bottoming out of consumer spending with festive season
• Potential triggers for the second half of the year include a good monsoon and low raw material prices
• Maintains overweight on India, Sensex trading close to year-end PT of 40,500

Motilal Oswal (Siddhartha Khemka)

• Impressive corporate earnings and reports that the government is considering further tax reforms boosted sentiment
• Turnaround of auto sales volume in the festival sessions, good monsoon and stable oil price added fuel to the market

Kotak Securities (Shrikant Chouhan)

• Sensex made a record high, but it was short-lived and profit taking emerged
• Strategy should be to buy on declines, focusing on private banks, NBFCs and infrastructure companies

Religare Broking (Ajit Mishra)

• In-line 2Q FY20 earnings so far and positive outlook by key auto companies and banks have lifted investor sentiment
• On the global front, Fed rate cut of 25bps and better-than-expected U.S. GDP for the third quarter seem to have provided some relief to investors’ concerns regarding the economic slowdown
• Going forward, consolidation cannot be ruled out given the market’s near-peak level

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