Sensex gains 59 points in seesaw trade, Nifty ends flat

MUMBAI: Benchmark equity indices struggled for direction on Monday, meandering between gains and losses through the day, as attention shifted to quarterly corporate earnings. Hopes of a stimlus package from the government supported the sentiment on Street. However, risisng coronavirus cases and a weak global market mood capped gains.

HDFC Bank had a good run post March quarter earnings over the weekend, while investors showed confidence in Infosys to deliver some good numbers later in the day. The shift in leadership from defensives to cyclicals continued.

Key facts

• The 30-share Sensex closed 59 points or 0.19 per cent higher at 31,648 while the 50-share Nifty dropped 0.04 per cent or 0.20 points to close at 9,267.

• Hopes of a stimulus package from the government supported the sentiment, which may provide the much-needed relief to the market. Finance Minister Nirmala Sitharaman on Friday reiterated India would soon announce fresh relief measures and economic stimulus.

• Partial lifting of the lockdown fared well with investors. Many agriculture-related and ‘essential’ factories and businesses resumed operations from April 20 after the government decided to relax lockdown in the less-affected areas.

• The market took cues from corporate earnings announcements. The country’s largest private lender HDFC Bank rose 3.91 per cent after it reported an 18 per cent rise in net profit for the March quarter, led by strong loan growth.

• Top software exported Tata Consultancy Services (TCS) edged up 0.66 per cent, despite reporting a 0.94 per cent year-on-year fall in profit at Rs 8,049 crore for the quarter ended March 31.

• Cautious trade in global markets kept the sentiment edgy. Caution gripped Asian share markets on Monday amid expectations a busy week of corporate earnings reports and economic data will drive home the damage done by the global virus lockdowns, a Reuters report said. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.23 per cent in slow trade, pausing after five straight weeks of gains.

• On the other hand, a jump in healthcare stocks lifted European stock markets on Monday, with the pan-European STOXX 600 index gaining 0.2 per cent according to a Reuters report.

Key market statistics

• Market breadth tilted in favour of the bears with three shares advancing for every share that declined on the BSE. Broader market was mixed with BSE Midcap index declining 0.21 per cent while BSE Small cap index logged 0.81 per cent gains. Volatility index India VIX snapped three day losing streak and edged up 1.74 per cent to 43.33.

• BSE IT index was the top sectoral gainer ahead of Infosys’ earnings announcement and climbed nearly 2 per cent. 3i Infotech was the biggest index gainer as it rose 19.64 per cent. Infosys advanced 3.75 per cent.

• BSE Metal index, on the other hand, was the biggest loser as it shed 3.35 per cent. Aluminum producer Hindalco fell 5.64 per cent.

• Only nine of 30 Sensex stocks closed higher, with financials and Infosys contributing the most to the gains. Mortgage lender HDFC advanced 3.35 per cent.

• On the other hand, private lenders Axis Bank and ICICI Bank dropped 5.10 per cent and 3.84 per cent, respectively. Cigarettes-to-hotels company ITC was down 3.91 per cent.

• State-run lenders jumped in Monday’s trade with stocks such as J&K Bank and UCO Bank rising as much as 20 per cent.

What next from here?

• “We are certainly heading into one of the worst recessions, the worst economic crises for sure. But our investment committee believes the government bond market is extremely overvalued and, hence, flows to equities should accelerate in the times to come,” Jitendra Gohil, Head-India Equity Research at Credit Suisse Wealth Management.

• “Sentiments were mixed regarding the recovery in corporate earnings, post easing of lockdown measures, and effectiveness of RBI measures to infuse liquidity into the financial system. Rate of spread of virus infections and stock specific earnings guidance will be in focus,” Vinod Nair, Head of Research at Geojit Financial Services.

What to watch out for

• Infosys’ quarterly earnings report card and the commentary is keenly awaited. It is expected to report tepid numbers for March quarter, with revenue and profit projected to grow in small percentages. Analysts said the focus during the earnings announcement will largely be on the guidance for next few quarters given the Covid dislocation.