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Opening bell: Sensex opens lower, Nifty around 14,500; IT stocks drag
India’s economic growth likely to pick up soon, says Morgan Stanley’s Jonathan Garner
Indian indices opened in the red on Thursday mainly dragged by IT stocks despite better than expected December quarter results.
Infosys, HCL Tech, TCS and Tech Mahindra contributed the most to the losses.
Indian indices opened in the red on Thursday mainly dragged by IT stocks despite better than expected December quarter results. Infosys, HCL Tech, TCS and Tech Mahindra contributed the most to the losses.
At 9:17 am, the Sensex was down 90 points at 49,402 while the Nifty fell 34 points to 14,530.
Broader markets, however, outperformed benchmarks with the midcap and smallcap index up 0.3 percent each. Among sectors, the Nifty IT fell 1.5 percent while, bank, auto, FMCG sectors remained in the green.
On the Nifty50 index, ONGC, IndusInd Bank, IOC, ITC and BPCL were the top gainers while Wipro, Infosys, HCL Tech, Tech Mahindra and Bajaj Finance led the losses.
In the previous session, Sensex ended 24.79 points or 0.05 per cent lower at 49,492.32, while Nifty inched up 1.40 points or 0.01 percent to its fresh closing record of 14,564.85. Foreign portfolio investors (FPIs) were net buyers in the capital market as they purchased shares worth Rs 1,879.06 crore on Wednesday, as per exchange data.
On the earnings front, Infosys on Wednesday posted a 16.6 percent rise in consolidated net profit at Rs 5,197 crore for the December 2020 quarter and increased its revenue growth guidance for FY21 to 4.5-5 percent on the back of large project wins and a strong deal pipeline.
”We believe the underlying strength of the market remains intact and any correction in the market will be bought out. A sustained recovery in key economic data for Dec’20, better-than-expected 3QFY21 corporate earnings so far and upbeat management commentaries continue to augur well for the market,” said an analyst.
After a quite depressed business and economic environment, India could be looking at a pickup in growth soon, believes Jonathan Garner, chief – Asia and Emerging Market equity strategist at Morgan Stanley. According to Garner, having some cyclicals in the portfolio would be advisable.
“We could be looking at a pickup in growth in India and therefore having some cyclicals in the portfolio would make some sense including industrial cyclicals and to some extent, consumer cyclicals and that’s different from what we are seeing in other emerging markets at the moment,” said Garner in an interview with CNBC-TV18.
Garner is slightly ‘overweight’ on India and thinks the market can outperform the other emerging markets.
“The market is outperforming other markets in north Asia even though we have had some concerns on that front typically around Iran-Iraq tensions, we maintain small overweight on India,” he said.
“A lower Brent oil price is sustained, it’s certainly quite favourable and there are important other domestic factors to consider in India… the Indian market can outperform others in Asia somewhat in this particular situation,” he added.
Garner is however worried about coronavirus.
“We think the Hong Kong, China equity markets are most impacted followed by other markets particularly in North Asia which have big trading linkages and complex supply chain linkages with China,” said Garner.
When asked about the Union Budget, he said, “We do have now a more transparent set of fiscal accounts. If we look forward, there is a marginal fiscal consolidation on a forward-looking basis but also an acknowledgement of lower than anticipated revenues for the current year. So in terms of stimulus, it’s not particularly large but fiscal prudent.”
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