Market at 2016 closing high; Nifty above 8200, Coal India up 3%

The bulls came charging back on Dalal Street after three days of consolidation. The market ended at 2016-closing high in a late rally spurted by index heavyweights. The Sensex closed  up 129.21 points or 0.5 percent at 26843.14, and the Nifty was up 39 points or 0.5 percent at 8218.95. The 50-share index closed up 8200 above for first time after October 2015.

Supporting the market optimism, Ridham Desai, Managing Director of Morgan Stanley India says with a good monsoon, bottomed-out earnings, market may touch new highs, barring a few global macro issues. He is of the view that the Sensex in the last 10 years has given the same returns as 10-year bond yields.

However, Gautam Chhaochharia, Head - India Research, UBS, is not feeling very confident. In an interview with CNBC-TV18, Chhaochharia said the fourth quarter earnings season was decent but a large part of the improvement was led by margin rather volume expansion.

For the overall market, UBS's base case fair value for the Nifty stands at 7500 while the best case is at 8,400. With the market close to the latter levels, Chhaochharia said the risk-reward ratio was turning unfavourable for the market.

Meanwhile, Japan's Nikkei fell sharply following a jump in the yen while European markets were flat in the run-up to a key European Central Bank (ECB) meeting. All eyes are on the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna with oil prices holding steady as analysts said they did not expect the meeting to result in restrictions on crude oil output. Crude prices are expected to a see small decline after OPEC meeting to be held today in Vienna, says David Lennox, Analyst, Fat Prophets, as no key announcements are expected from the meet.

Back home, Coal India ended 3 percent higher even though its production was lower than estimates in May. The government-run company said that it achieved a production of 42.58 million tonnes in May, lower than the target of 44.64 million tonnes (MT) for the month. JP Morgan has upgraded it to neutral from long-standing underweight. Tata Steel, Axis Bank, HUL and Hero MotoCorp were top gainers while Wipro, Sun Pharma, Lupin, ITC and Bajaj Auto were losers in the Sensex. About 1252 shares have advanced, 1364 shares declined, and 158 shares are unchanged.