Nifty hits 8,900 mark, at 18-month high

Mumbai: The CNX Nifty hit the 8,900 mark for the first time in 18 months led by gains in auto and banking stocks after weaker-than-expected US non-payroll data reduced investor fears of a Federal Reserve rate hike in the near term. Continuous inflow from foreign and domestic institutional investors also helped.

In intra-day trading, Nifty touched a high of 8,905.10, a level last seen on 5 March 2015, and gained as much as 1.08% from its previous close. India’s benchmark Sensex index touched a high of 28,843.48, a level last seen on 16 April 2015, and gained as much as 1.1%. Both indices gained in five out of the last six trading sessions.

“Liquidity has been one big global factor driving markets higher as investors look for higher yields in emerging markets as against the negative yields prevalent in several developed markets,” said Hitesh Agarwal, executive vice-president and head, retail research, Religare Securities. “Apart from this, the unexpected Brexit and its consequent potential impact on Eurozone growth have only increased global growth uncertainties. Moreover, the delay in US Fed rate hikes has helped the flow of capital sustain in favour of emerging markets.”

On Friday, Reuters reported that the US economy added 151,000 jobs in August, with the unemployment rate coming in at 4.9%. This led to a drop in market expectations for a September rate hike to 24% from 27% .

Foreign investors have bought $6.05 billion in local equity markets so far this calendar year, pushing up the Sensex by 10.4%.

Reform measures in India such as the proposed goods and services tax, good monsoons and the 7th Pay Commission are expected to boost consumption demand and earnings, Agarwal said.

The Nikkei India Composite Output Purchasing Managers’ Index (PMI) came in at 54.6 for August, a 42-month high. Both the manufacturing and services PMIs showed high rates of expansion last month, with the manufacturing PMI at 52.6 and the services PMI at 54.7.

In Nifty index, banking shares gained—Axis Bank rose 3.3%, IndusInd Bank 2.7%, Yes Bank 2.5%, Bank of Baroda 2%, State Bank of India 1.5% and ICICI Bank was up 1.2%.

Auto shares too went up. Tata Motors Ltd gained 3.2%, Maruti Suzuki India Ltd 2.3%, Hero MotoCorp Ltd 2%, Eicher Motors was up 0.8%, while Mahindra & Mahindra and Bajaj Auto Ltd rose 1% each.

Telecom shares continued to slide after rating firm Fitch said that the Reliance Jio Infocomm Ltd’s entry will be “credit negative” for incumbents in the telecom space and will also speed up consolidation. The report said smaller telcos are likely to be impacted most and only a handful will emerge out of the shakedown. Bharti Airtel fell 1.6%, Idea Cellular Ltd 1.1% and Reliance Communications Ltd was down 1%.

The market breadth was positive, with gainers beating losers in the ratio of 2:1 on the BSE. All the sectoral indices were trading higher, except BSE Telecom Index. They gained between 0.2% and 1.8%, while BSE Telecom Index fell 1%.