Indian equities continued to gain for the second day on Tuesday. Auto, banks, IT and consumer durables stocks gained while metals and FMCG stocks declined. Both Sensex and Nifty traded at a new life time high. BSE Midcap and Smallcap index outperformed by gaining 1.09% and 0.63% respectively. India VIX was down by 3.2% at 13.58 levels.At the close, the benchmark 30-share index, BSE Sensex gained 69.33 points or 0.12% at 58,247.09 with 17 components registering rise while the broad based NSE Nifty closed flat with a gain of 24.70 points or 0.14%, at 17,380 with 27 components posting rise.
Biggest gainers in the 30-share index were IndusInd Bank (4.07%), HCL Technologies (2.54%), Kotak Mahindra Bank (1.67%), Bajaj Auto (1.62%), Tech Mahindra (1.55%), and Larsen & Toubro (1.47%).
On the other hand, HDFC (1.07%), Nestle (0.97%), UltraTech Cement (0.87%), Hindustan Unilever (0.78%), Tata Steel (0.74%), Bajaj Finserv (0.48%), Bajaj Finance (0.36%) and HDFC Bank (0.30%) were the biggest losers in the Sensex.
Market breadth was positive with 1,934 advances against 1,309 declines.
Global markets continue to show weakness as investors show caution ahead of U.S. inflation data for clues about the U.S. Federal Reserve’s timetable to begin asset tapering amid worries over future growth. Focus is also on the possible passage of U.S. President Joe Biden's USD 3.5 trillion budget package, which is expected to include a proposed corporate tax rate hike to 26.5% from 21%.
Oil prices also hit a six-week high as another hurricane threatened to bring heavy rain to Texas and parts of Louisiana that were still recovering from Ida, and as the International Energy Agency forecast a big demand rebound for the rest of the year.
On the domestic side, Indian equities opened gap up and traded in positive territory throughout the session. Stock-specific activity remained high. Zee Entertainment rallied higher as shareholders sought to revamp the board at an AGM later today. Telecom stocks gained on reports of telecom relief package. On the macro front, WPI rose to 11.39% in August’21 vs 10.8% MoM.
The rise in inflation was primarily due to rise in prices of non-food articles, mineral oils; crude petroleum & natural gas; manufactured products like basic metals; food products; textiles; chemicals and chemical products etc as compared the corresponding month of the previous year. IndusInd bank, HCL Tech, Hero Moto, Adani Ports, and Tata Motors were top gainers. While Ultratech, HDFC, BPCL, Nestle, Tata steel were top losers.
Commenting on the outlook, Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said, "The market might consolidate for some time on account of fragile global cues. Investors would react to the US inflation data which would be released later today and this would likely set the tone of the market for this week. Valuations too have moved beyond comfort zones and hence could lead to bouts of profit booking and increase in volatility. But the overall sentiment in the domestic market remains positive, supported by improving economic data and positive earnings expectation. Good 1QFY22 earnings delivery has boosted hopes for a solid FY22 with 30%+ projected Nifty earnings growth, on the back of a strong 15% earnings growth in FY21."
