Weekly Wrap: Modi’s Return Helps Sensex, Nifty Cross New Milestones
Indian equity benchmarks clocked their best weekly rally in nearly seven months and crossed key milestones.
Indian equity benchmarks clocked their best weekly rally in nearly seven months and crossed milestones after Narendra Modi-led Bharatiya Janata Party is set to return to power with a bigger mandate.
The S&P BSE Sensex rallied 3.96 percent this week to close at 39,434 and the NSE Nifty 50 ended at 11,844, up 3.83 percent during the period.
The 30-stock index and the 50-share gauge crossed their milestones of 40,000 and 12,000, respectively, yesterday during morning trade when early counting trends suggested that the BJP-led National Democratic Alliance would secure a comfortable majority. Yet, the benchmark indices closed lower yesterday.
Analysts expect the monetary policy to be the next market-moving event, followed by the Union budget as uncertainty over elections clears.
“The verdict reduces the risk of populism significantly. However, it is unlikely to see a major departure from existing policies,” Macquarie said in a research report. “The focus would now move monetary policy to the front in the near term followed by the budget.”
Morgan Stanley agreed. “The market's focus will now shift to the growth cycle on which we are constructive,” it said in a separate report. “We expect the RBI to be more accommodative and the economy to come out of its soft patch of the past few months.”
We expect the Sensex touch 45,000 by June 2020 and Nifty to reach 13,500 from the current levels.
We are overweight domestic cyclicals, both consumer and industrials, as well as financials, and underweight defensive sectors, including healthcare and technology.Morgan Stanley Research Report
Notable Stocks That Rallied This Week
Group stocks such as Anil Ambani-led Reliance Group, Indiabulls and Adani Group companies were among those that rallied this week. Infrastructure companies Ashoka Buildcon, L&T and Dilip Buildcon, too, gained between 11-25 percent.
How Broader Markets Performed
The broader market represented by the NSE Nifty 500 Index advanced over 4 percent this week, led by gains in Timken India Ltd., KEI Industries Ltd. and Reliance Power Ltd.
Ten out of 11 sectoral indices compiled by National Stock Exchange ended higher this week, led by the NSE Nifty PSU Bank Index’s 13 percent rally. On the flipside, the NSE Nifty IT Index was the sole sectoral loser, down 1.73 percent.
Domestic investors turned net sellers of stocks for the first time in two weeks, while foreign investors turned buyers. Local investors pulled out Rs 2,579.67 crore from equity markets, the most in over a month. Overseas investors pumped in Rs 3,866 crore between May 20 and May 24.
Rupee Strengthens After Two Weeks
The Indian rupee halted its two-week fall against the U.S. dollar. The local unit appreciated 0.99 percent to close at 69.52 against the greenback. It was the week’s best performing Asian currency.
Meanwhile, Indian bonds fell this week. The yield on the benchmark 2029 bonds closed 14 basis points lower, to 7.22 percent, during the period.
Election Stories That You Might’ve Missed
- Will work together even with ‘harshest critics’, says Modi.
- Rahul Gandhi concedes defeat in Amethi.
- Modi reigns supreme. now India’s economy awaits.
- Privatisation only way to meet fiscal targets, says Manish Chokhani.
- As election mania settles, India market rally gets reality check.
- Brokerages bullish on mid caps, banks as BJP’s Modi set for another term.
- Election 2019 Results: The top ten takeaways.
- Modi is back, and so should the reminder about investing wisely.
Other Talking Points This Week
- State-run oil marketers’ debt rises the most in over a decade.
- India’s biggest drugmaker plans to start developing its own medicines.
- Anil Ambani to withdraw defamation suits against Congress, National Herald.
- From jewellery to handicraft, India’s labour-intensive exports are struggling.
- The curious case of Vakrangee’s trade receivables.
- 10 cheapest stocks with earnings growth potential.
- RBI to step up supervision capabilities through new division.
- ArcelorMittal tells NCLAT it will pay Rs 42,000 crore for Essar Steel takeover.
- Government seeks to recover tax dues from IL&FS Group companies.
Key Events To Watch Next Week
- May 30: India to release GDP data for Q1. (Bloomberg estimates at 6.2 percent)
- May 31: Fiscal Deficit data for March.
- May 31: Eight infrastructure industries data for April.
- June 1: May Auto sales data (YoY).
Nifty Earnings Announced This Week
