Sensex, Nifty see biggest jump in 2 weeks on possible US-China trade talks

Benchmark indices on Friday gained the most in two weeks, tracking gains in the world markets, on bets that trade tensions between China and the US will ease after planned talks later this month. 

The BSE Sensex added 0.75 per cent, or 284 points, to close at 37,948, completing its fourth consecutive weekly gain. The Nifty 50 added 0.75 per cent, or 85.7 points, to end at an all-time high of 11,471. The broader market mid-cap and small-cap outperformed, gaining nearly a per cent each. All but one of the 19 sectoral sub-indexes compiled by the BSE rose, led by the gauge of materials stocks. YES Bank and State Bank of India were top performers on the Sensex; each gained over three per cent.

China on Thursday said it would send Vice-Commerce Minister Wang Shouwen to the US for low-level trade talks in late August, which will be the first official exchange since negotiations broke down two months ago.

“New trade talks, although at a relatively low level of officials, will provide some stability to the market,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities.

Asian markets got a boost after the Dow Jones index of the US climbed 1.6 per cent.

”We are seeing some rub-off on India as well from the relief rally caused by hopes of easing trade tensions. India has become a safe haven within the bruised emerging markets,” said Nader Naeimi, head of dynamic markets at AMP Capital Investors.

India, Asia’s best-performing stock market this year, has so far been able to avoid contagion risk from other emerging markets, most of which have fallen amid trade tensions, China’s economic slowdown and dollar strength. The Sensex has gained 11 per cent so far this year.

Goldman Sachs, in a note, said there were plenty of investment opportunities in Indian stocks. Domestic stocks will also benefit from Reserve Bank of India’s (RBI’s) intervention in the forex market, decent monsoon, limited exposure to emerging market contagion and upcoming festive season, said the brokerage. 

Beneath the economy’s mixed – and often volatile – macro data, indicators from the ground point to a healthy activity picture, the note said.

Positive earnings momentum has supported recent gains. Earnings of most of the companies on the Nifty 50 index have either met or exceeded average analyst estimates for the June quarter results.

“Dissecting the earnings for the quarter just gone by, there was clear evidence in terms of pickup in activity. The management commentary from a number of corporates was positive. Quality stocks are seeing more buying interest on every small fall, in turn making those more expensive and taking the markets to new highs. One characteristic of the markets from here on will be intermittent bouts of volatility, which investors need to utilise tactfully for creation and realigning of portfolios,” said Devang Mehta, head – equity advisory, Centrum Wealth Management.