- Nifty 50 and Sensex extended gains to a third session with nearly 1% rise today
- Strong Q2 earnings from large, mid, and small-cap firms boosted market momentum
- Increased chances of a US trade deal contributed to positive market sentiment
Ambit Pvt. Ltd.'s Head of Institutional Equities Nitin Bhasin explained why markets are rallying in Wednesday's session. He attributed the recent momentum to several factors, including robust second-quarter results, possi trade deal with US, and urban consumption recovery.
The NSE Nifty 50 and BSE Sensex have extended gains to a third session. The indices have risen 0.93%, each so far today. The Nifty 50 posted the best intraday gain since Oct 16, while the Sensex recorded best gains since Oct 29.
More companies across large-caps, mid-caps, and small-caps reported better-than-expected results for the July–September, which is a positive trigger for the markets. Increased chances of clinching a trade deal with the US also driving the growth in markets, he said in an interview to NDTV Profit.
The biggest surprise for Ambit was the company's part of the Midcap index posting 13–14% earnings growth during the second quarter. Similarly, companies part of the Smallcap index posted about 11% earnings growth, Bhasin said.
Track live updates on Q2 earnings, scheduled to be released on Wednesday, here
One year ago, market participants went into a cycle of fragmentation and concentration. The NSE Nifty 50 index did not generate any material return but also did not lose any money. Companies like Relinace Industries Ltd. HDFC Bank Ltd. have given mid-teen return, he said.
Foreign-fund inflows into Indian markets have started to be resume. This is also an positive development for the markets to recover, he said.
Urban consumptions increased well during the festival season. Hence, it appears that the last one-month has been full of positive surprises, Bhasin said.
The credit growth eased and overtook deposit growth. Ambit believes credit growth rate may reach to 12% by the end of the year. Mostly, retail loans have grown, which shows that consumption has improved, he said.
However, not everything is rosy. Number for real-estate is good for the second quarter, but the numbers for hotel industry is not good for quarters. There are inconsistencies in the consumption, he said. The good thing is that the worries about stagnation are gone now.
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