Indian Equities Open Higher Following Mixed Asian Markets

On Monday, Indian equities began trading on a positive note, influenced by mixed signals from Asian markets. The Nifty index opened higher, reflecting a gap-up of 0.44 per cent, or 108.8 points, reaching 24,962.85. Meanwhile, the BSE Sensex, which comprises 30 major companies, saw an increase of 0.59 per cent, or 476.66 points, settling at 81,701.41.

Among the sectors, Bank Nifty continued its upward trend from the previous day, driven by strong performances from major banks like HDFC Bank, ICICI Bank, Axis Bank, State Bank of India (SBI), and Federal Bank. HDFC Bank's stock stood out, especially after it reported steady quarterly results, with its Net Interest Margins (NIMs) showing stability year-on-year (YoY). This positive performance prompted Goldman Sachs, a global brokerage firm, to recommend the stock as a buy, forecasting a possible 28 per cent upside.

At the time of writing, HDFC Bank shares traded 2.9 per cent higher at Rs 1,729.9, having reached a peak of Rs 1,734.45 during the trading session. Notably, the stock achieved an all-time high of Rs 1,791.9 per share on July 3, 2024.

However, certain sectors, including Auto, FMCG (Fast-Moving Consumer Goods), Media, and Oil & Gas, faced challenges and were trading in negative territory.

Dr. V K Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, remarked that the ongoing rally in global stock markets shows resilience, especially with the US markets hitting new record highs. He attributed this strength to the gradual decline in crude oil prices and stable US bond yields which have helped bolster the stock market despite ongoing geopolitical tensions in the Middle East.

Furthermore, there is optimism regarding potential stimulus measures in China, which, combined with low valuations of Chinese stocks, could encourage a continued shift from Indian to Chinese equities, according to Vijayakumar.

Additionally, much of the Foreign Institutional Investors (FII) Assets Under Management (AUM) are concentrated in the financial sector. The ongoing selling by FIIs has made valuations of these stocks attractive within an otherwise expensive market. Improved outlooks from major banks like HDFC, Kotak, and Axis Bank, particularly reflected in their Q2 results, also support this view.

In the broader Asian markets, trading was mixed. The Shanghai Composite in China saw a rise of 0.6 per cent, spurred by the People's Bank of China's unexpected rate cut, which aims to stimulate growth.

Equities, Nifty, Sensex