Negative Biases to Rule the Day
A lot had happened while market participants were enjoying a long weekend. Two of the index pivotal, namely, Reliance Industries and HDFC Bank, came out with earnings for the quarter ended September 2019. The country’s most valuable company by market cap, Reliance Industries, displayed a strong show in the digital and retail segments, which helped the company to offset softness in the core energy business. Meanwhile, the private sector lender, also known as Mr. Consistent as it has been delivering a twenty percent earnings growth for many quarters now, HDFC Bank, surprised the street with its net profit, surging by around 27 per cent YoY. Further, an early indication from the exit polls points to a decisive NDA victory in Haryana and Maharashtra assembly polls.
Just like every rose has its thorn, the market has to deal with some bad news. To begin with the news of the British Parliament’s vote to delay a decision on Boris Johnson’s new Brexit deal may hurt the stocks, which ran-up in expectation of an early Brexit resolution. Also, the allegation made by an anonymous whistleblower group against the IT major, Infosys, accusing the company of certain unethical practices to boost short term revenue and profits, may harm the stock severely in today’s session as American Depository Receipts (ADR) of Infosys plunged nearly 12 per cent in the US Exchanges. This episode is likely to bring back the bitter memories of the scandal that involved Satyam Computers.
So, the big question is will the markets extend its run-up for the seventh consecutive day? Well, an early indication from the SGX Nifty shows that the markets may open on a negative note today but that could be more of a reaction to the sharp fall in the price of Infosys ADR on Monday. We should continue to watch out for stock-specific action. The SGX Nifty is trading down by 55 points at 11,643 levels. On earning front, the key stocks, such as Asian Paint, Bajaj Finance, Bajaj Finserv, and Kotak Bank, will report their results today.
On Tuesday, the Asian markets are trending as per their western counterparts. Japan’s Nikkei 225 has added 0.25 per cent, which is followed by Hong Kong’s Hang Seng and China’s Shanghai Composite, rising 0.18 and 0.09 per cent, respectively.
Back home, bull has hit a sixer, as the key benchmark indices ended higher for the sixth consecutive session on Friday, their longest stretch in the recent time. The BSE Sensex closed at 39,298 up by 0.63 per cent and Nifty added 0.65 per cent to finish at 11,662. In the broader market, indices, especially Nifty Midcap and Smallcap, jumped more by 2.06 and 1.73 per cent, respectively, thereby outperforming the BSE Sensex/Nifty. Market breadth was positive. Barring Nifty Media, all other indices witnessed buying interest on the sectoral front, with Nifty Realty, Nifty Metal, and Nifty PSU Bank becoming top gainers.
On the global front, the US markets turned higher on Monday, as the optimism regarding the US-China trade deal continued, since Trump told reporters that the trade deal is coming along great. He also claimed that issues in phase two of the deal would be a lot easier to work out than those in phase one. Overall, the tech-heavy Nasdaq and the S&P 500 registered their best closing levels in a month while Dow rose 57 points as a steep drop in Boeing kept Dow upmove under check. Europe too ended in green with Germany’s DAX leading the gains as it surged up 0.91 per cent.