Sensex, Nifty gain for eight session; longest profit streak since November

Gains in index heavyweights such as HDFC, ITC helped Sensex recover from an early loss of 293 points to finish the day with gains of 113 points

The benchmark indices continued its winning streak for the eighth consecutive session on Monday in anticipation of a favourable monsoon. Gains in index heavyweights such as HDFC and ITC helped the BSE Sensex recover from an early loss of 293 points to finish the day with gains of 113 points, or 0.33 per cent, to 34,305.43.

The index of 30 blue-chip companies has gained on all occasions since April 4, when it had ended at 33,019. The broad-based Nifty has gained 400 points, or 3.94 per cent, in the past eight sessions. Last time the Sensex had gained for eight straight sessions was in November 2017.

Global markets on Monday remained subdued amid investor caution following US-led military strikes in Syria. “Lingering geopolitical concerns and weakness in Infosys led to a weak start. However, anticipation of good monsoon and a favourable earnings season triggered the recovery,” said Jayant Manglik, president, Religare Broking.

The India Meteorological Department (IMD) on Monday said monsoon this year was likely to be 97 per cent of the 50-year average. Monsoon is critical to India’s agriculture-dependent economy. It also affects inflation.

The forecast lifted shares of companies dependent on rural India. Shares of two-wheeler makers Hero Motocorp and Bajaj Auto rallied 1.8 per cent each, while tractor manufacturer Mahindra & Mahindra gained 1.7 per cent.

Among the losers were Tata Motors, which declined 5 per cent, followed by Infosys, which fell over 3 per cent. Tata Motors’ scrip took a hit after its British subsidiary Jaguar Land Rover (JLR) said it would cut jobs amid lower sales. Shares of Infosys declined after it lowered the operating margins guidance for this fiscal year.

Both foreign and domestic institutional investors were net sellers on Monday to the tune of Rs 3,081 million and Rs 290 million, respectively, according to provisional data. The market breadth remained mixed, with 1,463 stocks declining and 1,211 advancing on the BSE.

“Global factors may continue to influence the market but earnings and other local factors have become crucial for any directional move. The pace of rise in the index would be gradual from here,” said  Manglik.

The gains in the past eight sessions have surprised many as they have come amid an increase in global crude oil prices and weakness in the rupee. The upmove, however, has come on the back of a near 10 per cent fall in the benchmark indices in February and March.

The market had come off from its record high in January 2018 due to several factors such as a rise in US bond yields, political uncertainty, escalating geopolitical tensions, rising crude oil prices and scams in the banking sector.

Elara Capital, in a note last week, said a few of these concerns still persist and would continue to weigh on the market. Besides, a weak March quarter earnings outlook for the banking sector and a drop in equity mutual fund inflows are other woes.

“We expect the equity market to remain range-bound and the stocks with fundamental traits mentioned in are likely to outperform,” the brokerage said.