FPJ News Service mumbai

Equity markets maintained a positive momentum on Monday amid largely favourable Q2 earnings from midcaps and strong fund inflows from domestic institutional investors. Reflecting the uptrend, the 30-share BSE Sensex climbed 388.17 points to close at 84,950.95. The NSE Nifty rose by 103.40 points to settle at 26,013.45.

According to Bajaj Broking Research, expectations of the much-publicized India-US trade deal and the NDA’s decisive victory in Bihar have reinforced confidence in policy continuity and political stability. Softer inflation data (retail and wholesale) contributed to the improved sentiment. 

“Investors anticipate a strong catalyst for further upward movement. A potential trade deal remains a crucial trigger that participants are closely monitoring. Currently, the risk-reward ratio is largely favorable, bolstered by stronger-than-expected Q2 earnings from Midcaps, which have reinforced confidence in growth revival and point to potential future earnings upgrades,” said Vinod Nair, Head of Research, Geojit Investments.

“Q2 results declared so far indicate an uptrend in earnings growth. Net profits have grown by 10.8%, which is the best in the last six quarters. This is a beat over earlier estimates. The present trends in consumption indicate that earnings will further improve in Q3. Discretionary consumption, particularly automobiles, will lead earnings growth in Q3. Whether the present boom in consumption will continue even after the festival season is to be watched,” Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said.

He said 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.