Share markets in India continued their upward climb in afternoon trade with both Sensex and Nifty closing a fresh all-time high. At the closing bell, the BSE Sensex closed higher by 355 points. While, the NSE Nifty finished higher by 97 points. Meanwhile, the S&P BSE Midcap Index ended up by 0.7% while the S&P BSE Small Cap Index ended up by 0.4%.
Barring FMCG stocks, all sectoral indices finished the day in green with information technology sector and PSU sector witnessing maximum buying interest.
Meanwhile, trading was disrupted at India's National Stock Exchange on Monday morning, after price quotations for individual stocks and indices failed to update.
After a snag of about three hours, the exchange resumed trading, at 12:30 PM.
The markets are touching record highs every day. It makes sense to sit back and evaluate if the fundamentals are in place for such heady growth. When one looks at corporate earnings over the past 5 years, it paints a different picture.
Earnings Yet to Catch Up with Valuations
While valuation has reached dizzy heights, earnings are yet to catch up. Investors are hoping that earnings will eventually catch up with valuations. Even the slowdown on the economy due to the notebandi impact has been ignored.
With money from retail investors coming into the market at a steady pace, the general assumption amongst investors is that growth will eventually come and justify the premium valuations they've given to the markets. Perhaps investors are getting ahead of themselves.
Asian equity markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.76% and the Hang Seng rose 0.63%. The Shanghai Composite lost 0.17%. European markets are higher today with shares in Germany leading the region. The DAX is up 0.64% while France's CAC 40 is up 0.31% and London's FTSE 100 is up 0.30%.
The rupee was trading at Rs 64.54 against the US$ in the afternoon session. Oil prices were trading at US$ 44.06 at the time of writing.
Bharti Airtel share price ended up 5.4% on the reports that the telecom major is planning to launch VoLTE services in India today.
If true, Bharti Airtel will become the second Indian carrier to launch VoLTE service in the country, competing directly with Reliance Jio. Currently, Jio is the only operator offering VoLTE service, but unlike Airtel, Jio has a VoLTE exclusive network, and does not support 2G or 3G connectivity.
IDFC share price and Shriram Group companies slid on BSE after Shriram group and IDFC unveiled their intent to merge the two entities.
IDFC was down 5.7%. IDFC Bank share price was up 0.7%.
Shriram Transport Finance Corporation share price (down 3.3%), and Shriram City Union Finance (down 6.4%), edged lower.
Pharma stocks closed the day on a mixed note with Divis Lab and Lupin leading the gains. In the latest development, Lupin announced that it received a final approval for its Flucytosine Capsules from the United States Food and Drug Administration (USFDA).
The drug is a generic version of Valeant Pharmaceuticals International Inc's Ancobon capsules, 250 mg and 500 mg. The capsules are indicated for the treatment of serious infections caused by susceptible strains of Candida and/or Cryptococcus.
Further, the capsules had US sales of US$ 46.6 million, according to IMS MAT figures for March 2017. The company's cumulative filings with the USFDA now stand at 368. It has received approvals for 218 products while 150 product filings are pending approval.
In another development, Divis Laboratories share price was up 7.9% after the US health regulator said it would lift the import alert imposed on unit-II at Visakhapatnam.
The USFDA had issued an import alert under clauses 99-32 and 66-40 in March 2017 and a warning letter in May 2017 for the company's Vishakhapatnam facility.
Lately, pharmaceutical companies have been facing a surfeit of problems in the largest generic market, the US. Rising competition and consolidation in the distribution channel have led to price erosion and delayed approvals for them.
Once considered a safe haven for investors has been on a steady decline over the past two years.
The list of pharma sector woes (subscription required) is long. But, is there light at the end of the tunnel? Girish Shetty, our research analyst thinks there is.
As per him, it doesn't make sense to paint all pharma stocks with the same brush. The leaders of the industry will certainly survive this phase. And just like IT, there are interesting, niche pharma stocks that are worth your attention.
Moving on to the news from the economy. Foreign Portfolio Investment (FPI) inflows during the period between January-June 2017 (H12017) stood at nearly US$ 23 billion into the Indian capital markets as against US$ 1.2 billion in the first half of 2016.
The growth in FPI inflows was largely driven by several factors, including expectations from the government that it would speed up development and economic reforms.
According to latest depository data, FPIs in H1 2017 invested a net Rs 533.54 billion in equities, while pumped Rs 941.99 billion in the debt market during the time period, translating into a net inflow of Rs 1,475.53 billion.
The foreign investors had in January pulled out Rs 34.95 billion from the capital markets starting the year on a negative note.
However, FPIs had reversed the outflow trend in February and the infusion continued till June, enthused by clarity on FPI taxation, GST roll-out and expectations of a good monsoon.
Going forward, there are a few challenges but we believe, they are not strong enough to disrupt the current trend. Markets and the rupee are soaring to new highs, which offer a good profit booking opportunity for the foreign investors.
And here's a note from Profit Hunter:
It was an unusual day for the stock markets today. The National Stock Exchange (NSE) witnessed some technical glitches and trading in cash and the F&O (futures and options) segment were halted. Although the trading resumed at 12:30 pm, traders and dealers still had difficulties implementing their trades. The Nifty 50 Index, however, was still up 97 points by end of the session.
The Bombay Stock Exchange (BSE) functioned normally throughout the day.
The Sensex opened 150 points gap up and immediately traded at a fresh lifetime high. The index traded in an uptrend throughout the day and ended the session 355 points (+1.13%) up at its record high. Since the start of June, the index has been finding resistance from 31,400. But today, it broke strongly above this level.
Will the Indian stock markets continue their momentum amid technical glitches?
Sensex at Record High
(Click on image to enlarge)
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