Nifty Likely To Touch 7800 Mark
As expected Indian equities managed to sustain its up-ward momentum even yesterday and posted a consecutive sixth trading session of gains. Benchmark share indices firmed up in late trades to end near their day's highs with the Sensex closing above 26,000 for the second time amid a rally in telecom shares and renewed buying interest in Reliance Industries and HDFC Group shares. Foreign institutional investors which have remained net buyers in the previous four sessions also aided sentiment. Sensex ended up 311 points at 26,026 after hitting an intra-day high of26050 and the 50-share Nifty gained 84 points to close at7768 after touching a high of 7774.
Shares of telecom services providers such as Bharti Airtel and Idea Cellular ended higher after the telecom regulator authority of India (TRAI) recommended allowing sharing of all categories of airwaves held by operators, the move could help companies to reduce cost of mobile services. Bharti Airtel ended nearly 5% higher and Reliance Communication gained nearly 4%.
As the Nifty scaled newer highs, equity AUMs also moved in tandem. At Rs 2.51 trillion, equity AUM reached the all time high levels. Net flows also swelled to Rs 8267 crore, the highest levels since January 2008 (Rs 13678 crore). Revival in equity markets has brought back investor interest in equity schemes. The amount of NFOs at Rs 1114 crore was also the highest since January 2010 (Rs 1590 crore). Indian Equities also witnessed a host of QIP issuances in the preceding month, the prominent ones being Idea Cellular, Yes Bank and Reliance Communications.
We are of the opinion that the quarterly results for June quarter have been really strong. With improvement in economic scenario we expect the results season to be better than the street estimates. With improvement in earnings we feel the valuations would remain fair even after a surge in indices.
On the monsoon front the deficit has reduced significantly and is expected to contract further with good rainfall expected in coming fortnight. Again food and vegetable prices are still a worry as retail prices are still moving northwards.
US stocks rose, with the Standard & Poor’s 500 Index closing two points from a record, as data showed inflation has failed to gain a toehold and earnings from Comcast Corp. to Chipotle Mexican Grill Inc. topped estimates. The S&P 500 rose 0.5 percent to 1,983.53. The index climbed as high as 1,986.24, topping its previous intraday record. The Dow Jones Industrial Average increased 61.81 points, or 0.4 percent, to 17,113.54. Investors have been scrutinizing inflation data to determine when the Fed will begin raising its benchmark interest rate. Last week Yellen told lawmakers the central bank plans to press on with record easing to combat persistent weakness in the job market. Inflation has failed to get a toehold as slowing global demand has prevented companies from exercising pricing power. If prices remain in check, Fed policy makers can keep interest rates low well into 2015. A separate report showed sales of previously owned U.S. homes climbed in June to an eight-month high, a sign the housing market is making more headway.
As for Asian markets taking cues from US markets the indices are trading in positive zone. While Nikkei is trading in green with gains of 0.03% and even Hang Seng is up 0.49%. Shanghai Composite is also trading in green with gains of 0.60%.
SGX Nifty is also trading in positive with gains of 33 points or (Up 0.42%). We would not be surprised if the indices propel to a new all time high levels and even on a closing basis. However the rally is expected to be driven by the large cap stocks backed by strong results. Mid Cap and small cap indices are also likely to witness goo buying. But these indices are unlikely to outperform the benchmark indices. In a nut shell, Nifty is like to touch 7800 mark today.