COVID vaccine hopes fuel rally on D-Street; Sensex vaults 500 points

A global rally lifted India’s benchmark indices for a fifth consecutive day on July 21, which saw the S&P BSE Sensex rally more than 500 points and the Nifty50 reclaim 11,100 levels.

The S&P BSE Sensex ended 511 points higher at 37930 while the Nifty50 closed with gains of 140 points at 11,162.

Promising results from coronavirus vaccine trials helped bulls put up a strong show across Asia.

“Benchmark indices again showcased volatility but showcased positive momentum, in sync with global cues. EU leaders have finally reached an agreement on a massive stimulus plan to combat the pandemic impact,” Vinod Nair, Head of Research at Geojit Financial Services told .

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Reports for successful progression in COVID-19 vaccine trials also boosted the global markets while positive quarterly earnings, especially from the leaders, provided additional support to Indian markets, Nair said.

Though the uptrend remained intact, investors should be cautious since it seemed to be in overvalued territory, he said. “Result-heavy day today and stock-specific commentary will be looked at,” Nair said.

Sectorally, action was seen in energy, public sector, oil & gas and Bankex while profit-taking was visible in telecom, FMCG, and healthcare stocks.

The broader markets underperformed the benchmarks. The S&P BSE Midcap index fell 0.22 percent while the S&P BSE Smallcap index rose 0.24 percent.

Top Nifty gainers included Eicher Motors, BPCL, IOC, and Power Grid.
Bharti Infratel, Britannia Industries, Bajaj Finserv and Bajaj Finance were among the top Nifty losers.

Stocks & Sectors

Sectorally, the S&P BSE Energy index rose 2.7 percent followed by the S&P BSE Oil & Gas index that was up 2.7 percent and the S&P BSE Bankex closed with gains of 2.3 percent.

Selling pressure was visible in S&P BSE Telecom index that was down 1.8 percent. The S&P BSE FMCG index fell 0.7 percent and the S&P BSE Healthcare index ended 0.6 percent lower.

A volume spike of more than 100% was seen in stocks like SBI Life, ACC, Sun TV, Power Grid and PNB.

Long buildup was seen in stocks like BPCL, Ramco Cement, Escorts and PNB.

Short buildup was seen in stocks like Bajaj Finance, IGL, ZEE Entertainment and Shriram Transport.

More than 100 stocks on the BSE hit their fresh 52-week high. These included Dixon Tech, Britannia Industries, Dr Lal Pathlabs, and MCX India.

Stocks in news

Shares of PSU banks were up after reports emerged that the government was looking to privatise more state-owned banks and reduce their numbers from 12 to five. The Nifty PSU Bank was up 2 percent.

Oil marketing companies gain 3-5 percent on reports of global companies showing interest in picking a stake in BPCL.

Bajaj Finance closed 4 percent down after reporting lower than expected earnings.

SBI Life, ICICI Prudential & HDFC Life ended with gains after reporting Q1 earnings.

Majesco stock jumped 5 percent after the company board agreed to sell its US subsidiary to private equity firm Thoma Bravo.

Bajaj Finance share shed 4 percent after the company reported a 19 percent year-on-year decline in Q1FY21 consolidated net profit due to higher provisions and lower business acquisitions.

ACC stock price was up more than 3 percent after the company reported a 40.53 percent decline in consolidated net profit to Rs 270.95 crore for the quarter ending June.

Elgi Equipments stock jumped over 5 percent after the company signed MoU with the Government of Tamil Nadu.

Den Networks share price surged 10 percent after the company reported a four-fold jump in its consolidated net profit to Rs 58.32 crore for the quarter ended June, helped by lower expenses.

Technical View

The Nifty formed a bullish candle on the daily charts.

India VIX fell by 1.14 percent to 24.42 levels. Overall, lower volatility is supporting the bullish stance with a higher market base.

The Nifty has rallied more than 500 points in five trading sessions and supports are gradually shifting higher. It has been respecting its rising support trend line by connecting all the recent swing low of 7,511

As long as it holds above 11,000, it can extend momentum towards 11,250 – 11,300 then 11,500 zones. On the downside, supports are seen at 11,000 then 10,900, said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited.

Positive setup in ICICI Bank, Reliance Ind, Escorts, SBI Life, IOC, Maruti, Eicher and HDFC Ltd while weak structure in Mindtree, Info Edge, Havells and Petronet LNG, he said.

The Bank Nifty opened positive and gained nearly 500 points to extend its move towards 22,850 levels. It formed a bullish candle on the daily scale as buying interest was seen throughout the session.

It has gained more than 1300 points in the past three trading sessions with the structure of higher highs- higher lows on the daily frame.