Vaccine hopes, strong Q1 results drive Sensex higher for 5th day, up 511 points

Buying in index heavyweight Reliance Industries and lenders took the benchmark equity indices higher for the fifth straight session on Tuesday as investors on Dalal Street focussed on better-than-expected earnings momentum, firm global cues and hopes of Covid-19 vaccine, shrugging off record rise in Covid-19 cases.

The 30-share BSE Sensex closed 511 points or 1.37 per cent higher at 37,930, while the 50-share Nifty settled 140 points or 1.27 per cent up at 11,162.

Vinod Nair, Head of Research, Geojit Financial Services said the benchmark indices again showcased volatility but the momentum was, in sync with global cues.


“EU leaders have finally reached an agreement on a massive stimulus plan to combat the pandemic impact. News about successful progression of Covid-19 vaccine trials also boosted the global markets while positive quarterly earnings results, especially from the leaders, provided an additional support to the Indian markets,” he added.

Energy-to-telecom behemoth Reliance Industries was the top contributor to Sensex’s gains as it advanced nearly 3 per cent. Financial counters including HDFC (up 4.36 per cent), ICICI Bank (4.41 per cent), Kotak Mahindra Bank (up 3.04 per cent) and automobile major Maruti Suzuki (up 4.53 per cent) together contributed over 300 points in today’s Sensex rally.

"Markets are inching higher with every passing day and Nifty may face the next hurdle around 11,250 level. The up move in the banking index is now helping the index to sustain at the higher levels while others are witnessing rotational buying. Traders should maintain their focus on trade selection and position management," said Ajit Mishra, VP - Research, Religare Broking.

Overall, the market breadth stood in favour of the bulls on the BSE, with 1,448 counters settling the day in the green. On the other hand, 1,243 stocks closed in the red, while 162 stocks stood unchanged. Broader markets underperformed flagship Sensex as BSE Midcap slipped 0.22 per cent while BSE Smallcap rose 0.24 per cent.

With a rally of 2.74 per cent, the BSE Energy index emerged was the top gainer on the sectoral chart. It was followed by BSE Oil & Gas (up 2.71 per cent), Bankex (up 2.71 per cent), Realty (up 2.03 per cent) and Power (up 1.96 per cent). BSE Telecom (down 1.85 per cent) and FMCG (down 0.72 per cent) indices were among the major sectoral losers.

In a scrip specific development, shares of Vodafone Idea cracked 8 per cent, a day after the Supreme Court said it was not reasonable to give 15 to 20 years period for paying AGR dues by telecom companies.

Bajaj Finance declined over 4 per cent after the company reported reported a 19 per cent drop in consolidated net profit at Rs 962.32 crore for the first quarter of the current fiscal on higher provisioning.

Markets at a glance

• Sensex up 1.37% or 511 points to close at 37,930
• Nifty up 1.27% or 140 points to close at 11,162
• 18 of 30 Sensex stocks close higher
• Top Sensex gainers: Power Grid up 6.14%, ICICI Bank 4.41%
• Top Sensex losers: Bajaj Finance down 4.31%, Bajaj Finserv 3.58%
• Market breadth firm; advance-decline ratio at 1.15:1
• BSE Midcap down 0.22%, BSE Smallcap up 0.24%
• BSE Energy top sectoral gainer, up 2.74%
• Top Energy gainers: Chennai Petro up 8%, MRPL 7.86%
• BSE Bankex up 2.34%; ICICI Bank up 4.41%, Kotak Bank 3.04%
• BSE Telecom down 1.85%; Sterlite Tech down 12.60%, Voda 8.08%
• Bajaj Finance slips 4.31 per cent post Q1 earnings
• Rahul Bajaj to step down as Bajaj Finance chairman

Who moved my market

• Strong earnings

Despite more than 40 per cent YoY fall in net profit, cement major ACC posted better than expected set of numbers for June quarter on the back of better pricing and controlled costs. “On the back of strong pricing tailwinds especially for the Southern exposure of ACC and optimisation of freight and miscellaneous expenses, company posted an EBITDA of around Rs 525 crore, which was above our estimates,” YES Securities said. Bajaj Finance posted a 19.40 per cent year-on-year (YoY) fall in consolidated net profit at Rs 962.32 crore for the quarter ended June 30. However, the figures came in line with ET NOW poll of Rs 970 crore.

• Firm global stocks

Asian shares were mostly higher on rising hopes for an effective vaccine to fight the coronavirus pandemic. Scientists at Oxford University reported that their experimental coronavirus vaccine prompted a protective immune response in hundreds of people who got the shot in an early trial. Hang Seng, Nikkei and Shanghai ended in the green.

• Vaccine hopes

Early data from trials of three potential COVID-19 vaccines released on Monday, including a closely-watched candidate from Oxford University, increased confidence that a vaccine can train the immune system to recognize and fight the novel coronavirus without serious side effects, Reuters reported. The possibility of a vaccine being available as early as this year offset fears over surging domestic coronavirus cases.

What to watch out for

• The coronavirus cases in India are yet to peak and are witnessing a record rise each day. This is a major cause of concern.

• The direction of global markets will be closely watched as the domestic market tends to follow suit.

• Progress on vaccine for Covid-19 treatment will be closely watched.

• The ongoing June quarter corporate earnings season is providing a better picture of the damage caused by the pandemic-induced lockdown. More than the numbers for the quarter, the commentary and the outlook are the key moniterables. Bajaj Auto and Larsen & Toubro are scheduled to announce their earnings on Wednesday.