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Last Updated : Nov 06, 2019 04:47 PM IST | Source: Moneycontrol.com

Nifty reclaims 12,000, Sensex at record high; 5 factors driving markets

The BSE Sensex also touched a fresh record high of 40,606.91, rising 221.55 points to 40,469.78, while the Nifty50 climbed 48.80 points to 11,966 after hitting an intraday high of 12,002.90.

Sunil Shankar Matkar
 
 
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The Nifty50 reclaimed 12,000 for first time since June 11 as bulls gathered momentum from the late morning deals and strengthened their hold on Dalal Street as the day progressed on November 6.

The BSE Sensex also touched a fresh record high of 40,606.91, rising 221.55 points to 40,469.78, while the Nifty50 climbed 48.80 points to 11,966 after hitting an intraday high of 12,002.90.

But the market breadth was balanced as about 1,276 shares declined against 1,204 advancing shares on the BSE. The broader markets also underperformed frontliners with the BSE Midcap index rising 0.15 percent whereas the Smallcap index fell 0.36 percent.

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Foreign institutional investors' buying in Indian equities continued, which also played a supportive role. They net bought Rs 868 crore worth of shares in November so far, in addition to Rs 8,596 crore buying in previous month.

Here are five factors that drove market higher:

Infosys

Co-founder Nandan Nilekani cleared the dark clouds with respect to whistleblower complaints and said the company is committed to defining and following the highest corporate governance standards, which lifted stock 3.7 percent intraday.

Infosys, in a statement to exchanges, said it strongly condemned the mischievous insinuations made by anonymous sources against the cofounders and former colleagues that hinted at their involvement in the recent whistleblower allegations.

"These speculations are appalling and seem to be aimed at tarnishing the image of some of the most accomplished and respected individuals. I have deep regard for the life-long contribution of all our cofounders. They have built this institution and have served this company selflessly and even today, remain committed to the long-term success of Infosys," Nandan Nilekani, Chairman said.

While addressing a press conference, he said the company has taken complaints of the whistleblower very seriously and as a result, the audit committee brought on the external company to investigate and would provide a summary of investigation once it is complete.

"Even God can't change numbers of company," he said, adding he is personally satisfied that there was nothing wrong with Panaya acquisition.

He believes that the company is under no obligation to put out every investigative report and the company's deal flows continued to be as large as ever.

"I am feeling insulted with accusations, but don't want to bias the investigation. We will respond to the class action law suit in due course," Nilekani said.

Better-than-expected earnings

The July-September quarter earnings season, so far, has been slightly better-than-expected even after the corporate tax rate cut adjustment. The asset quality of major banks improved sequentially, and FMCG companies numbers were in line during the quarter.

Even the management commentaries in the ongoing Q2FY20 result season turned marginally better.

"Post September 2019, market sentiment has revived sharply due to the government and the RBI undertaking several initiatives to arrest the growth slowdown. This will, however, take time to work on the ground and reflect in the numbers. Despite persistent negative new flows on high frequency indicators, at the moment, in our view, the market is ignoring near-term earnings and growth concerns and focusing on long-term reforms (tax cuts, disinvestment/privatization, potential cuts in income tax rates/DDT/LTCG, etc.)," Motilal Oswal said.

ICICI Bank

The country's largest private sector lender, ICICI Bank, saw it share price rally 3.3 percent intraday to hit a record high of Rs 483.9 after market sources indicated that its weight is likely to be increased in the MSCI later this week.

As a result, there could be more than $1 billion inflow in the stock from fund houses to rebalance the portfolio, which tracks MSCI index.

Nifty Private Bank index jumped 1.5 percent.

Continuity in reforms

The government has been trying very hard to remove every bottleneck that is hampering the growth of the economy. It has been working since August.

Finance minister Nirmala Sitharaman, on November 5, said the government and Reserve Bank are working to resolve the issues being faced by realty sector. Admitting that the realty sector has been left out of the booster measures announced earlier, she said the sector has a spillover effect on many sectors, especially the core sector.

In addition, Finance Minister Nirmala Sitharaman, after the fraud witnessed in PMC Bank, also reiterated the government's commitment to rein in cooperative banks by bringing in necessary legislative changes.

"We expect the government to maintain its policy/reform momentum and announce more initiatives in the coming days. Some of the key monitorables from a near-term perspective include: (a) Pick-up in rural consumption, (b) Progress on key stressed asset resolution and IBC cases, and (c) Potential tax changes in Personal income tax, Dividend Distribution tax and Long-term Capital Gains tax," Motilal Oswal said.

Technical View

The Nifty50 formed bullish candle on daily charts, indicating that the momentum may continue in near term, which could take the index to over earlier record highs soon.

"It is imperative for bulls to push the index beyond 11,989 levels on closing basis to regain strength. In such a scenario bulls can make an attempt to retest life time highs of 12,103 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

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First Published on Nov 6, 2019 04:47 pm
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