Sensex surges 698 pts on buying in IT, auto stocks

Kotak Securities has said the Nifty-50 could report 19% earnings growth in Q3 with likely upgrades coming in sectors like automobiles, auto ancillaries, metals and mining, cement, select banks and pharmaceuticals.

Stocks of IT services and automobile companies powered the markets to new closing highs on Friday. The Nifty rallied by 209.9 points (1.48%) to close at 14,437.25 while the Sensex soared 689.19 points (1.43%) to close at 48,782.5, ending with weekly gains of 2.3% and 1.9%, respectively.

The Sensex completed its longest stretch of weekly increases since 2009. The market capitalisation of BSE-listed companies also touched a new high.

Maruti was the top gainer in the Sensex pack, rallying 5.94%, followed by Tech Mahindra, Infosys, UltraTech Cement, M&M, PowerGrid and NTPC. On the other hand, IndusInd Bank, Bharti Airtel, SBI, ITC, HDFC and Bajaj Finance slipped up to 1.37%.

The market capitalisation of BSE-listed companies touched Rs 195.63 lakh crore, which is a record high. While the start of 2021 has been quite strong for investors, what is also interesting is that investors grew richer by Rs 32.49 lakh crore in 2020.

The performance of the broader markets was better than the benchmarks, with Nifty Midcap 100 touching record highs during the week.

The markets were propelled by buying in IT stocks ahead of the third-quarter results.

Tata Consultancy Services declared its results after market hours.

Experts expect the market to remain firm going forward because of the start of earnings season.

Rusmik Oza, executive vice president – head of fundamental research, Kotak Securities, said: “It will be interesting to see how IT stocks react after results as to earnings growth of the frontline companies, except for Infosys, is expected to be in single digit.

The Street is expecting IT stocks to sustain at higher levels because of the potential upward revision in future guidance.”

Kotak Securities has said the Nifty-50 could report 19% earnings growth in Q3 with likely upgrades coming in sectors like automobiles, auto ancillaries, metals and mining, cement, select banks and pharmaceuticals.

It expects the Nifty to go anywhere between 14,500 and 15,000 before the Budget.

However, even with the markets witnessing a strong rally, metal stocks saw a correction. Hindalco was among significant losers on the Nifty as it fell 1.94%.
Foreign portfolio investors pumped in $803.9 million on Friday while domestic institutional investors sold stocks worth $316.3 million.

In 2020, the markets saw FPI flows worth $23.3 billion, which were the highest among emerging markets.

Edelweiss Securities said, “Post pandemic, the world markets are flushed with liquidity because global central banks have been more than generous in pumping liquidity into the system and India clearly stands out among the emerging markets pack.”