Indices surge on the back of China rally; 124 stocks hit 52-week high

The Indian markets ended higher for a fourth straight session on Monday, tracking a sharp rally in global shares after a surge in Chinese stocks triggered a wave of optimism for a recovery from the Covid-19 pandemic.

The benchmark Sensex and the Nifty have advanced 4.5 per cent in the past four trading sessions to end at their highest level since early March.

The latest rally in global equities was fuelled by gains in the Chinese stocks, with the CSI 300 Index, a gauge for performance of shares listed in Mainland China, surging as much as 5.7 per cent — the highest since February 2019.

While the 50-share Nifty ended the session at 10,763.65, up 156.30 points, or 1.47 per cent, the Sensex rose 465.86 points, or 1.29 per cent, to end at 36,487.28 points.

 

The positive economic data, including unexpectedly strong US jobs numbers, during the past week has helped investors overlook rising Covid-19 cases, said experts. They said investors were also counting on cheap liquidity and fiscal stimulus to sustain the global economic recovery in the aftermath of the pandemic.

Several Chinese state media outlets over the weekend carried reports that investors were rushing back to stocks as part of a ‘bull comeback’ and signalled further government support for markets. An editorial in China’s Securities Times on Monday said fostering a healthy bull market after the pandemic is now more critical to the economy than ever.

The editorial whipped up a frenzy, and Chinese social media exploded with searches for ‘open a stock account’. 

“The positivity regarding the recovery is extending to the Indian markets also despite surging infections, along with liquidity. The first signs of de-escalation of India-China border tensions should also calm the markets. We maintain the sell-on-rise strategy and advise investors to trade with caution,” said Vinod Nair, head of research at Geojit Financial Services. The June employment data in the US came in better than forecast on Thursday. Non-farm payrolls rose by 4.8 million in June, and the unemployment rate fell to 11.1 per cent as the US continued the reopening of its economy. Analysts said apart from global cues, the beginning of the June quarter earnings season and macro indicators like IIP and CPI data will be the focus. “We believe more than earnings, management commentary will be crucial for market participants to get a sense of the Covid-19 impact on the businesses,” said Ajit Mishra, vice-president, research, Religare Broking. 

 

Reliance Industries and HDFC Bank rose 3.6 per cent and 2.7 per cent, respectively, and accounted for nearly half the Sensex gains.

The overall market breadth was positive, with 1,634 stocks advancing and 1,157 stocks declining on the BSE. A total of 124 stocks hit their 52-week high, and 417 stocks hit their upper circuit. More than two-thirds of the Sensex components ended the session with gains.
 

Mahindra & Mahindra was the best performing Sensex stock, gaining 7.5 per cent. Sixteen of the 19 sectoral indices of the BSE ended the session in green. Realty and auto stocks rallied the most, with respective indices rising 2.95 per cent and 2.93 per cent.