Sensex scales Mt 49K as Q3 earnings season begins with a bang

NEW DELHI: After the Street-beating Q3 earnings report from TCS, other IT companies also saw buying on Monday, taking benchmark indices to fresh highs. Global cues were also supportive of the rally.

Foreign investors have been extremely bullish on India as the prospects of emerging markets are much better than the developed world, which is still reeling from the pandemic despite vaccine approvals.

"Frenzied FII buying is taking the markets to an unchartered territory. Trend prediction has become extremely difficult. The market is in an overbought zone and there is no valuation comfort. Consensus that liquidity will remain abundant and interest rates low is driving the market. Risk is the consensus going wrong," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.


“TCS results and management commentary are very positive and indicate the improving prospects for the sector. But most positives are in the price.”

Factors driving markets

-TCS beats estimates: TCS on late Friday reported an over 7 per cent jump in its December quarter profit, beating Street estimates. Analysts expect a similar outperformance from its peers as well, which are scheduled to report their earnings later in the week.

-US job losses: The US economy shed jobs for the first time in eight months in December, as the country buckled under an onslaught of COVID-19 infections. US President-elect Joe Biden said the US jobs report issued on Friday shows Americans need more immediate relief now and that taking action now will help the economy even with deficit financing.

-More stimulus expected: Longer-term Treasury yields were at their highest since March after Friday's weak jobs report only fanned speculation of more US fiscal stimulus, now that the Democrats have control of the government.

How are blue-chips doing?

After opening in the green, the benchmark indices maintained their lead. At 9.38 am, BSE flagship Sensex was up 410 points or 0.84 per cent at 49,192. NSE benchmark Nifty followed, and added 114 points or 0.79 per cent to 14,460.

"We have achieved our next level of target and resistance which is 14,450. If we can keep above this, the next target should be 14600. Since we are in the unchartered territory, the target levels are getting smaller. We have a new support for the Nifty between 14,200 and 142,50 levels. Intraday dips can be utilised to enter the index for higher targets. Stops must be placed and strict caution should be practiced," said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.

In the 50-share pack Nifty, Infosys was the biggest gainer, up 3.65 per cent. HCL Tech, Wipro, Tata Motors, ITC, HDFC Bank, Coal India and TCS were among other gainers.

Tata Steel was the top loser in the pack, down 1.77 per cent. Hindalco, Maruti Suzuki, Adani Ports, Axis Bank, ONGC, UltraTech Cement and Bajaj Finance were other losers in the pack.

Broader markets
Broader market indices traded with gains in-line with their headline peers in morning trade. Nifty Smallcap added 0.97 per cent, while Nifty Midcap advanced 0.52 per cent. The boadest index on NSE, Nifty 500 was up 0.70 per cent.

Rail Vikas Nigam, Trident, Indiamart Intermesh, Dhani Services, Mphasis and TVS Motor were among major gainers from the space while Dalmia Bharat, Shriram Transport Finance, Polycab, Kalpataru Power and Amber Enterprises witnessed selling pressure.

Global markets
MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2 per cent, having surged 5 per cent to record highs last week. Japan's Nikkei was on holiday after closing at a 30-year high on Friday.

South Korea went flat after an early jump, and Chinese blue-chips firmed up 0.7 per cent. Futures for the S&P 500 slipped 0.6 per cent from all-time peaks, after gaining 1.8 per cent last week. EUROSTOXX 50 futures eased 0.1 per cent and FTSE futures were flat.