Four factors why Sensex, Nifty rose to record highs today
The Sensex and Nifty scaled fresh peaks in early trade today on gains in large cap stocks such as NTPC, Coal India and Vedanta. While the Sensex hit an all-time high of 38,920, the Nifty touched new peak of 11,760. The Sensex has gained over 14% since the beginning of this year. The Nifty, too, has not been far behind. The index is up 11.50% since the beginning of 2018. Here's a look at why Sensex, Nifty hit all-time highs in trade today.
Healthy corporate earnings
The Q1 earnings show by India Inc has been led by a better performance by firms in FMCG and information technology sectors, which have logged double-digit growth in net sales and net profit. Earnings of banking and finance companies too logged double-digit growth, which have improved sentiment on the street.
India Inc witnessed a healthy 22 per cent revenue growth in the June quarter, according to a report by Icra.
An analysis of 173 companies showed consumer-oriented sectors such as auto, FMCG, consumer durables and airlines as well as commodity linked sectors such as cement, iron and steel and oil and gas, saw stronger sales growth in the June quarter.
"On average, the corporate sector has reported a 22 per cent rise in revenue but on flat margins," Icra said in a report.
While pharma grew 20.8 per cent, supported by strong domestic sales and base effect, IT reported a healthy 12.9 per cent boosted by strong performance in their digital offerings and partial recovery in the BFSI segment.
FIIs have poured in Rs 2,263.94 crore in July 2018 and Rs 6,631.81 crore in August this year. The investment comes after three consecutive months of withdrawals by FIIs starting April 2018. FIIs withdrew Rs 61,130 crore from April to June which led to negative sentiments on Dalal Street. The reduction in FII selling in Indian market signals the growing faith of these investors in Indian securities.
Meanwhile, domestic institutional investors (DIIs) too have added to the momentum of the market. DIIs have invested Rs 3,334.39 crore into Indian markets since the beginning of this month.
Global shares were mostly higher today after the White House said it reached a preliminary agreement with Mexico on replacing a North American free-trade deal.
France's CAC 40 rose 0.1 percent in early trading to 5,485.39, while Germany's DAX was up 0.2 percent at 12,561.44. Britain's FTSE 100 gained 0.7 percent to 7,630.36. US shares were set to be flat with Dow futures virtually unchanged at 27,078. S&P 500 futures gained less than 0.1 percent to 2,899.
Japan's benchmark Nikkei 225 finished at 22,813.47, up 0.1 percent. Australia's S&P/ASX 200 gained 0.6 percent to 6,304.70. South Korea's Kospi edged up 0.2 percent to 2,303.12. Hong Kong's Hang Seng added 0.2 percent to 28,333.14 after fluctuating throughout the day. The Shanghai Composite index inched down 0.1 percent to 2,777.98, adjusting from its gains the previous day.
Asian shares advanced and the US dollar hovered near one-month lows as a US-Mexico deal to overhaul the North American Free Trade Agreement boosted risk appetite.
Asian economies generally benefit from trade deals that will encourage exports to the US. The Nasdaq composite index topped 8,000 for the first time after the NAFTA news, although the trade deal isn't final. The US still needs to reach an understanding with Canada, the third party in the accord.
IT, pharma stocks react to weak dollar
The dollar index paused near one-month lows against major currencies to stand at 94.84 which boosted the Indian currency. This helped IT and pharma stocks gain ground. The Nifty IT index rose 127 points to an all-time high of 15,641 points in trade today. It had closed at 15,514 level yesterday. The BSE IT index too rose 130 points to an all time high of 15,414 level in trade today.
Pharma stocks rose also rose today with the BSE healthcare index rising to its 52 week high of 15,742 level.
The Nifty pharma index too hit its 52 week high of 10,243 level in trade today.