Sensex, Nifty climb wall of worries to hit record highs

It was a historic day as both Sensex and Nifty hit record highs despite weak global cues on June 3. The S&P BSE Sensex closed above 40,000 for the first time while the Nifty50 closed above 12,000 for the first time in history.

The final tally on D-Street – the S&P BSE Sensex rose 553 points to 40,267 while the Nifty50 ended 165 points higher at 12088. The S&P BSE Sensex hit an intraday record high of 40,308.90 while Nifty50 hit a life high of 12,103.05.

All sectoral indices witnessed healthy buying with auto, consumer durables, energy and metals being the top gainers, up 1.8-1.9 percent. The broader market indices BSE Midcap and Smallcap too ended with healthy gains of 0.9 percent and 0.5 percent, respectively.

The S&P BSE Auto index rose 1.9 percent followed by the BSE Energy index that rallied 1.83 percent and the S&P BSE Consumer Discretionary index gained 1.8 percent.

Top Sensex gainers include Hero MotoCorp (up 6 percent), Bajaj Auto (up 3.9 percent), IndusInd Bank (up 3.7 percent), Asian Paints (up 3.6 percent), and HUL (up 2.9 percent).

Despite weak global cues, concerns over a slowdown in the Indian economy, muted auto sales data, and not so encouraging March quarter results—liquidity, continuity of reforms, fall in crude oil prices and rate cut hopes seems to be fueling the rally.

“We continue to maintain our cautious stance on the markets at higher levels in the near-term. The market participants would eye the RBI’s monetary policy announcement as it would provide further direction to the markets,” Jayant Manglik, President – Retail Distribution, Religare Broking Ltd told Moneycontrol.

“Further, domestic macro data, global developments, especially with respect to US-China trade talks and movement of crude oil prices would continue to be on investor’s radar,” he said.

Umesh Mehta, Head of Research, Samco Securities said that despite the weak macros and domestic factors, Nifty and Sensex crossed milestone levels and rallied up. The financial sector is rejoicing but the real economy is struggling.

May auto sales numbers are out and the majority of the companies have shown a deterioration in monthly sales, but despite all the negativity clouding the auto sector, their share prices are on an uptick.

“This just proves that the negativity of a slowdown was already anticipated by the Street and has been priced in. Auto stocks are close to the bottom of their cycle and any turnaround in sales would give an upward thrust to the prices,” said Mehta.

Stocks in news:

Two-wheeler stocks gained most in auto space. Hero Motocorp, Bajaj Auto and TVS Motor rallied 4-6 percent after May sales data. Nifty Auto index jumped 1.96 percent on buying across segments.

Paint, oil retailers, tyre and aviation stocks rallied after Brent crude futures fell sharply last week.

Gujarat Gas shares gained 2 percent after HDFC Securities inited coverage with a buy call saying city gas distribution entities deserved higher valuation multiples than utilities.

Aurobindo Pharma fell 2 percent on worries over USFDA observations for unit-3.

Triveni Engineering gained 6 percent after board approval for share buyback for up to 1 crore shares at Rs 100 per share.

Mahindra & Mahindra advanced a percent after Canadian fund CDPQ acquired 1.54 percent stake in M&M for Rs 1,244 crore from the promoter.

Premier Explosives jumped 7 percent on bagging order worth Rs 100 crore from Defence Ministry.

Global cues:

On the global front, most Asian markets ended lower amid increasing concerns over the state of global trade after the US threatened to impose 5 percent tariff on all Mexican imports. Japan’s Nikkei was down 0.9 percent and China’s Shanghai declined 0.3 percent.

European markets recouped early losses to trade flat with a negative bias, at the time of publishing this copy.

Brent crude futures, the international benchmark for oil prices, rebounded sharply to trade 0.4 percent higher.