Sensex Ends 466 Points Higher; Energy, Auto and Realty Stocks Rally

Mon, 6 Jul Closing

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Indian share markets extended gains as the session progressed and ended on a strong note, driven by automobile stocks and index heavyweight Reliance Industries.

Extending gains to the fourth consecutive session, benchmark indices climbed to four-month highs tracking gains in Asian peers.

The optimism surrounding vaccine research also lifted market sentiment. Last week, Bharat Biotech in collaboration with the Indian Council of Medical Research and National Institute of Virology began human trials of Covaxin, India's first indigenous vaccine.

Meanwhile, recent economic data indicated that the worst is over, and the economic activity is stabilizing.

At the closing bell, the BSE Sensex stood higher by 466 points (up 1.3%).

Meanwhile, the NSE Nifty closed higher by 156 points (up 1.5%).

The SGX Nifty was trading at 10,750, up by 181 points, at the time of writing.

The BSE Mid Cap index ended up by 1.2%, while the BSE Small Cap index ended the day up by 1.3%.

On the sectoral front, gains were largely seen in the energy sector and auto sector.

Asian stock markets traded strong despite rising coronavirus infections. China's Shanghai Composite broke its 850-day long-term moving average and climbed 5.7%.

Hong Kong's Hang Seng was up 4% while Japan's Nikkei gained 1.8%.

The rupee is trading at 74.68 against the US$.

Gold prices are trading down by 0.1% at Rs 47,980 per 10 grams.

Speaking of the current stock market scenario, have a look at the chart below which shows how the BSE Sensex and the smallcap index have moved over the past one year:

The markets are coming out of the deep fall. An important driver of this rally is the increasing inflow from foreign institutional investors now that the global economies have opened the liquidity tap.

In her latest video, Richa Agarwal, editor of our premium smallcap service Hidden Treasure, shares her thoughts on what this could mean for the rebound in smallcaps and how to make the most of it.

Tune in to find out more...

Moving on, market participants were tracking Tata Consultancy Services (TCS) share price.

Shares of the company witnessed buying interest today, ahead of its first quarter (April-June) earnings of the financial year 2020-21 (Q1FY21) on Thursday. The stock was trading near its all-time high level of Rs 2,296, touched on September 3, 2019.

In the past four trading days, the IT services major has seen its share price surging 9% after the company said its board will meet on July 9 to approve the financial results for June quarter. The board will also consider the declaration of interim dividend to equity shareholders.

In news from the banking sector, HDFC Bank was among the top buzzing stocks today. The private lender reported a strong loan growth of 21% year-on-year (YoY) at Rs 1.04 trillion for the first quarter of financial year 2020-21 (Q1FY21).

In an exchange filing, the private lender said that the bank's advances aggregated to approximately Rs 1.04 trillion as of June 30, 2020, a growth of around 21% as compared to Rs 83 billion as of June 30, 2019.

The bank's deposit accretion remained healthy at 25% YoY at Rs 1.19 trillion. Current Account Savings Account (CASA) ratio was up 30 basis points YoY to around 40% as of Q1FY21.

During the quarter, the bank purchased loans aggregating Rs 13.8 billion through the direct assignment route under the home loan arrangement with HDFC.

HDFC Bank share price ended the day up by 2.8%.

Moving on to news from the IT sector, shares of Eclerx Services surged over 10% today after the company said its board will meet later today to consider a share buyback proposal.

"A meeting of board of directors of the Company is scheduled to be held on Monday, July 6, 2020 to consider and approve, inter-alia, the proposal for buy-back of fully paid-up equity shares of face value of Rs 10 each of the Company," Eclerx said in a regulatory filing on Friday after market hours.

As of March 31, 2020, the promoters held 50.76% stake in technology process management company. Mutual funds held 21.11% holding, followed by foreign portfolio investors (17.56%) and individual shareholders (5.96%).

During the financial year 2019-20, Eclerx Services had concluded the buyback of 1.75 million equity shares of Rs 10 each, at a buyback price of Rs 1,500 per share and total buyback amount of Rs 2.6 billion.

Note that many companies have launched share buybacks amid a sharp fall in their stock prices. Some of these companies include Motilal Oswal Financial Services, Delta Corp, Dalmia Bharat, Emami, Kalpataru Power, Granules India and Amrit Corporation.

Speaking of buybacks, as a shareholder in cash rich companies, you should not only be wary of expensive buybacks. But if possible use it to your advantage to rake in some cash.

As per Rahul Shah, co-head of Research, investors should not assume buybacks are always good. Here's an excerpt of what he wrote in one of the editions of The 5 Minute Wrapup:

• The reason behind the buyback must be investigated. At the end of the day, an increase in earnings should be more a function of the inherent robustness of the business, as that's what will help it continue to grow at a healthy pace.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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