It appears that Dalal Street is still celebrating Diwali. The Sensex and Nifty shot up to record closing highs for the second day in row. The Sensex touched an all-time high of 27,894.32, while the Nifty recorded a high of 8,330.75,
Ironic isn’t it, since October has earned an ominous reputation on Wall Street for delivering a number of the most prominent stock market declines? First was the Panic of 1907, which took place in October. The sell-off in 1929 began on Monday, October 28, and picked up steam on Tuesday, October 29. That was “Black Tuesday”. "Black Monday" occurred on October 19, 1987.
This month, the IMF projected a lower global growth rate. It was also the month when the U.S. Federal Reserve terminated its quantitative easing programme. On the other hand, Bank of Japan expanded its massive stimulus programme. The latter, combined with the news that the Federal Reserve does not plan to raise interest rates in a hurry, raised hopes in India for additional foreign inflows.
The slide in the price of crude is also a huge positive for India as the country is highly dependent on crude imports. In a post titled Impact of crude oil price fall on Asian economies, Live Trading News pointed out that India is to benefit significantly from the plunge in crude oil prices. If the decline is sustained, India’s consumer price index, or CPI, can be lowered by 1.8% over the next 12 months, and its current account deficit kept under 2% of gross domestic product, or GDP, which will be very conducive to economic growth.
Besides, continued inflows on solid corporate earnings and optimism over India's growth and economic reforms also contributed. The government has also relaxed the rules for foreign direct investment, or FDI, in the construction sector.
Our analysts' views on quarterly earnings and the market rally
- Public energy companies are rallying due to new reformist policies
- Industrials are rallying due to new orders inflow which will trickle in the P&L after one or two quarters
- Metals and Mining remain subdued due to global fundamentals
- Consumer companies continue to do well
- Auto companies have given stellar returns owing to rising passenger and 2-wheeler vehicle sales, while commercial vehicles have begun to display the first few signs of revival.
- Healthcare companies, in general, have delivered good results
- Private banks, specially mid caps, have delivered outstanding results; public sector banks have not and are battling a rise in non performing assets
- The power sector is rallying due to new reforms
Our analysts' views on the quarterly results
Ambuja Cements
Axis Bank
Cairn India
HDFC Bank
Hindustan Unilever
ICICI Bank
Infosys
Reliance Industries Ltd
Tata Consultancy Services
UltraTech Cement
Wipro
