Govt. raising DA for staff seen spurring consumer spending
Ahead of the earnings season, banking and financial stocks staged a smart rally on Wednesday and helped the benchmark indices gain significant ground even as most analysts expect subdued results from India Inc.
The 30-share Sensex, which hit an intraday low of 37,415.83 during the morning session, closed at 38,177.95, gaining 645.97 points or 1.72%. Stocks such as Indusind Bank, ICICI Bank, State Bank of India, HDFC Bank, Kotak Mahindra Bank and Bajaj Finance were among the top gainers in the Sensex pack.
The broader Nifty closed at 11,313.30, up 186.90 points or 1.68%. The Nifty Bank index was the best performing sectoral index, gaining more than 1,000 points on Wednesday.
The gains in the Indian indices came amid an overall subdued trend in most other markets. The benchmarks of Hong Kong, Indonesia, Singapore and Philippines all closed in the red.
Market participants attributed the late rally to several factors including the upcoming earnings season and the government’s attempts to push consumption be increasing the dearness allowance by 500 basis points ahead of the festive season.
Brokerages, however, are expecting a lacklustre set of numbers from most sectors.
“Earnings risks continue to be tilted to the downside on account of the underlying weak demand scenario in the domestic economy, the uneven asset quality trends in financials and the deflationary trends in commodity prices. At this point, tax rate cuts will largely limit the downgrades rather than driving big upgrades on the earnings front,” said a report by Motilal Oswal Financial Services.
Software major TCS will be announcing its results on Thursday. Next week would see the country’s largest pure-play fast moving consumer goods major HUL announcing its results.
Gains in the equity market on Wednesday came despite foreign investors continuing to be net sellers at ₹485 crore. While the benchmarks saw hefty gains in banking majors, the broader market breadth remained negative with 1,280 stocks losing ground against 1,241 gainers.
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