Sensex and Nifty open higher on strong Q2 earnings; FII selling continues

Sensex and Nifty opened higher on Monday, led by gains in blue-chip stocks after robust Q2 earnings. Foreign institutional investors continued net selling for the fifth consecutive day, while domestic investors maintained their buying spree, supporting the market.

Mumbai: Equity benchmark indices Sensex and Nifty opened on a positive note on Monday amid buying in blue-chip stocks on the back of healthy earnings performance by corporates in the second quarter.

The 30-share BSE Sensex climbed 234.42 points, or 0.28 per cent, to 84,797.20 in morning trade. The NSE Nifty advanced 56.10 points, or 0.22 per cent, to 25,966.15.

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Among the Sensex firms, Kotak Mahindra Bank, State Bank of India, Titan, Bajaj Finance, Axis Bank, Larsen & Toubro, NTPC, Bharti Airtel, Bharat Electronics Ltd, ICICI Bank, Maruti Suzuki India, Mahindra & Mahindra, and Bajaj Finserv were the gainers.

On the other hand, Tata Motors Passenger Vehicles, Eternal, UltraTech Cement, Tata Consultancy Services , Infosys, PowerGrid and Trent were among the laggards.

V K Vijayakumar, Chief Investment Strategist, Geojit Investments, said, “Q2 results declared so far indicate an uptrend in earnings growth. Net profits have grown by 10.8 per cent, which is the best in the last six quarters.” He noted that this was higher than estimates. The present trends in consumption indicate that earnings will further improve in Q3. Discretionary consumption, particularly automobiles, will lead earnings growth in the third quarter.

Broader Asian equity markets were trading largely in the negative zone. Japan’s Nikkei 225 benchmark, Shanghai’s SSE Composite index, and Hong Kong’s Hang Seng were trading in the red territory while South Korea’s Kospi in the positive zone.

The US markets ended largely lower on Friday.

“The Nasdaq and the S&P 500 climbed well off their lows and into positive territory before eventually ending the day roughly flat,” Devarsh Vakil, Head of Prime Research, HDFC Securities, said.

Brent Crude, global oil benchmark, fell 0.87 per cent to USD 63.83 per barrel.

Meanwhile, foreign institutional investors remained net sellers for the fifth day in a row and offloaded equities worth Rs 4,968.22 crore on Friday. However, domestic institutional investors sustained their buying spree and picked up stocks worth Rs 8,461.47 crore, according to exchange data.

“A sustained uptrend in the market and new record highs have not been happening since FIIs continued selling on all rallies. A change in FII strategy is necessary for the market to break into new record highs and remain there.

“This, in turn, requires steady improvement in earnings growth, which is likely from Q3 onwards. If the global AI trade loses steam, that would be a helpful factor,” Vijayakumar added.

On Friday, the BSE Sensex ended 84.11 points higher at 84,562.78, while the NSE Nifty went up 30.90 points to settle at 25,910.05.