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Equity benchmarks managed to end at new record closing highs after volatility on Monday but the broader markets underperformed throughout session. HDFC Group, FMCG, select auto stocks and Reliance helped the Nifty close above psychological 9,600-mark for the first time but the correction in select banks, technology stocks and Sun Pharma limited gains.
The 30-share BSE Sensex rose 81.07 points to 31,109.28 and the 50-share NSE Nifty gained 9.80 points at 9,604.90 despite mixed global cues.
Experts expect the market to continue to hit fresh record highs, which not only because of liquidity but also likely faster recovery in earnings going ahead. Valuations may remain high in short term, they feel.
Tushar Pradhan, CIO, HSBC Global Asset Management observed that the market was not rising just because of sentiment or liquidity. There has been an earnings surprise in many cases and such fundamentals are driving it, he said, adding that earnings in FY18 could be better.
“The market is assessing the earnings which have been much better than anticipated," he said.
FIIs bought more than Rs 10,000 crore worth of shares in current month while domestic institutional investors made Rs 4,500 crore worth of buying.
The broader markets underperformed benchmarks on weak breadth and sharp correction in Anil Ambani & Adani Groups stocks. The BSE Midcap index lost 1 percent and Smallcap shed 1.5 percent as more than two shares declined for every share rising on the exchange.
Anil Ambani Group stocks were under pressure, especially after a media report indicated that as much as 10 banks have raised a red flag on Reliance Communications that posted a loss of Rs 1,285 crore in FY17. The stock hit a 52-week low of Rs 19.70 during the session, before closing down 20.54 percent at Rs 20.50.
Other group stocks like Reliance Infrastructure, Reliance Defence, Reliance Power and Reliance Capital were down 6-11 percent.
Adani Group stocks also caught in bear grip after Adani Power posted net loss of Rs 4,960.5 crore in March quarter against profit of Rs 1,085.1 crore in year-ago quarter. The stock lost 7 percent while Adani Transmission, Adani Ports and Adani Enterprises slipped 4-5 percent.
Sun Pharma and Tech Mahindra were biggest losers among Nifty stocks, down 11.6 percent each to hit more than 40-month low after disappointing earnings for the quarter ended March 2017.
JPMorgan has downgraded Sun Pharma to neutral from overweight and slashed target price to Rs 550 from Rs 750 as it feels uncertainty on regulatory issues & earnings will keep stock under pressure. The research firm also downgraded Tech Mahindra to neutral from overweight and lowered target price to Rs 410 from Rs 550 as it feels near-term outlook on margin seems uncertain.
Ahead of March quarter earnings, BHEL lost 3 percent while L&T closed flat with a positive bias.
Among others, HDFC (up 3.3 percent), HUL (up 3.54 percent), ITC (up 2.38 percent), Hindalco (up 1.39 percent), Maruti Suzuki (up 0.85 percent) and IndusInd Bank (up 0.64 percent) hit fresh 52-week highs during the day while Lupin (down 0.23 percent) and Aurobindo Pharma (down 3.67 percent) hit new 52-week lows.
Reliance Industries gained 1.55 percent whereas ICICI Bank, Infosys, SBI and Axis Bank declined 1-2 percent.
In the broader space, Strides Shasun lost 4 percent after the US FDA issued form 483 with 3 observations for its Bengaluru unit while Wockhardt gained 3 percent as Ireland regulator granted certificate of GMP compliance to its Shendra unit.
PSP Projects closed at Rs 199.50 on day one, down 5 percent from issue price of Rs 210.
On the global front, European stocks were mixed following lackluster trade in Asian equities and decline in the oil price.
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