Sensex ends 226 points higher on firm global cues; RIL top laggard

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Benchmark equity indices ended higher on Friday following a firm trend in global markets. The BSE Sensex closed 226 points, or 0.43%, higher at 52,925. Likewise, the NSE Nifty index settled 72.55 points, or 0.46%, higher at 15,863.

Top gainer and losers With a gain of nearly 5%, Tata Steel emerged as the top gainer in the Nifty pack. It was followed by Axis Bank (up 3.06%), SBI (up 2.83%), ICICI Bank (up 2.48%) and Hindalco (up 1.83%). On the other hand, Reliance Industries, NTPC, Titan, HUL and Asian Paints declined between 1%-2.50%.

Going with market analysts, RIL’s Rs 75,000 crore capex plan in the next three years in the New Energy business may defer free cash flow generation. Hence, it may pose a near term overhang till there is more clarity on the potential return profile.

While retaining a bullish view on RIL, JM Financial said, “We await more clarity; hence we keep our estimates unchanged. We maintain ‘Buy’ on RIL with a target price of Rs 2,500 per share, given its industry leading capabilities across businesses, and expectation of strong 17-18% EPS CAGR over the next 3-5 years.”

Sectoral update Among the sectoral indices on the BSE, the metal index advanced the most 2.79%. The BSE Bankex, Basix Materials, Finance, Telecom, Capital Goods and Healthcare indices also gained over 1%. On the other hand, the BSE Energy, Oil & Gas, Utilities and Consumer Durables indices slipped between 0.50%-1.80%.

Expert view Vinod Nair, Head of Research at Geojit Financial Services said, “Domestic equities rose in today’s session mirroring an upbeat mood in the global markets after US President Joe Biden embraced Senate infrastructure deal to help stimulate the economy. The overall mood in Wall Street was lifted since the US jobless claims ticked down as the economy heals. On the domestic front, recovery was seen in banks and metal stocks following its consolidation during the past few days.”

Global cues

Asian markets ended with a strong note tracked by strong finish on Wall Street bourses overnight following President Biden’s bipartisan Senate infrastructure deal and the earlier dovish comments by Treasury Secretary Janet Yellen and Fed Chair Powell.

Janet Yellen said inflation should retreat by year end from its current elevated level, while Powel reassured that the central bank is in no hurry to raise interest rates. Hong Kong shares closed higher following continued buying from mainland investors, who purchased a net 5-billion-yuan worth of Hong Kong shares on Friday.