MARKET COMMENT Jayant Manglik, President, Religare Broking After some consolidation, the Indian equity benchmark indices ended Tuesday’s session on a strong note, with the Nifty closing at 10,843 levels, up 56 points or 0.5%. Amongst the broader market indices, BSE Midcap outperformed, with gains of 0.9%, whereas BSE Smallcap closed in-line with benchmark. Barring Metals and Telecom, all the other sectoral indices ended in green with Banks, Capital Goods, FMCG and IT being the top performers. Amongst the global indices, European markets were trading lower, while Asian markets closed on a mixed note. Going forward, market participants would be actively tracking global developments, progress of monsoon, currency movement and crude oil prices. Furthermore, FOMC meet outcome scheduled tomorrow will be crucial and it would dictate further course of market. We expect volatility to remain high in the near term and hence would advise investors to stick to only fundamentally sound companies Nifty Pharma index ends 2.58% higher. Top gainers: COMPANY LATEST PREV CLOSE GAIN() GAIN(%) LUPIN 855.00 809.50 45.50 5.62 DR REDDY'S LABS 2190.65 2083.20 107.45 5.16 GLENMARK PHARMA. 588.05 564.40 23.65 4.19 DIVI'S LAB. 1064.15 1024.60 39.55 3.86 AUROBINDO PHARMA 595.55 576.45 19.10 3.31 Nifty sectoral gainers of the day BSE Sensex: Dr. Reddy's, SBI among top gainers of the day; Bharti Airtel top loser Market at close The S&P BSE Sensex ended at 35,693, up 209 points while the broader Nifty50 index settled at 10,843, up 56 points. HIGHLIGHTS BofA Merrill Lynch June Fund Manager Survey · Average cash balance ticks down to 4.8% in June, from 4.9% in May, but still above the 10-year average of 4.5% · Allocation to US equities climbs 16ppt to net 1% overweight, the first time investors surveyed have gone overweight in 15 months · 64% of respondents think the US has the most favorable outlook for profits, a 17-year high; all other regions have net negative profit outlooks · A record 42% of investors surveyed say companies are over levered, far exceeding the 32% peak in 2008; overall an all-time high of net 34% think corporate balance sheets are overleveraged · June rotation shows investors are selling cyclical plays (banks, emerging markets and Eurozone equities) in favor of defensive sectors and US equities · When asked what catalyst is most likely to stop Fed tightening, 69% of investors surveyed state domestic reasons (lower inflation, higher unemployment, Fed independence); 23% cited emerging market contagion or a debt crisis in the peripheral EU · This month, the most commonly cited tail risk to the markets is a trade war (31%), followed by a Fed/ECB hawkish policy mistake (26%) and a Euro/EM debt crisis (23%); trade tensions have been the dominant macro concern for investors in 2018 · Allocation to commodities hits a new 8-year high, rising 1ppt to net 7% overweight, the highest since April 2012 when WTI was $105/bbl · “Long FAANG+BAT” remains the most crowded trade identified by investors for the fifth straight month and most crowded trade outright since “Long USD” in January 2017; the top three in June are rounded out by “Short US Treasuries” (16%) and “Long USD” (9%) · Expectations for faster global growth hold steadywith just net 1% of investors indicating they think the global economy will strengthen over the next 12 months, barely above the boom/bust threshold and still at their lowest level since February 2016
The S&P BSE Sensex ended at 35,693, up 209 points while the broader Nifty50 index settled at 10,843, up 56 points.
Among sectoral indices, the Nifty Pharma index ended over 2.5% higher led by a rise in the shares of Lupin, Dr. Reddy's Laboratories and Glenmark Pharmaceuticals.
Post this summit, investors will now focus on policy meeting of the US Federal Reserve, which is expected to raise rates. The outcome of the policy meeting is likely to be announced late on Wednesday, June 13, 2018.
(with Reuters inputs)