Stocks soar on poll cheer, but earnings cloud stays

Good harvest, govt spending may lift demand, but earnings cuts seen rising

- Dipti Sharma

Markets raised a toast to the thumping Maharashtra mandate, lifting stocks for a second straight day as bargain hunters returned.

Benchmark indices extended Friday's gains to Monday, with the Nifty clocking the biggest two-day rise since early June. However, market experts are unsure if the gains will sustain or prove to be fleeting.

After tumbling 11% from its 1 October record, the Nifty has in two sessions recouped nearly 4% from its recent low on 21 November.

The recovery was led by a surge in stocks like Power Grid Corp. of India, Larsen & Toubro, Tata Consultancy Services, UltraTech Cement and Apollo Hospitals Enterprise.

Foreign institutional investors (FII) net purchased Indian equities worth ₹9,948 crore, while domestic institutions net sold shares worth ₹6,908 crore.

The HDFC Bank stock rose 2.3%, contributing the most to Monday's gains, as the increase in its weighting in MSCI indexes took effect.

According to Nuvama Institutional Equities, India may witness about $2.5 billion net passive FII flows thanks to the MSCI rejig, including $1.9 billion in HDFC Bank.

Manish Sonthalia, chief investment officer of Emkay Investment Managers, termed the recovery as a "possible temporary pullback" after a relentless fall.