BSE Sensex, Nifty: The markets are expected to continue their upmove in the coming week, say analysts

Domestic stock markets clocked sharp gains this week, continuing their upmove after the government's move to lower corporate taxes triggered the biggest single-day surge in more than a decade. Benchmark stock indices rose more than 2 per cent in the week ended September 27. The S&P BSE Sensex index rose in three out of five sessions to rise a total 807.95 points, marking a surge of 2.13 per cent on a weekly basis. The broader NSE Nifty benchmark climbed 238.2 points - or 2.11 per cent - during this period. Analysts say the rally may continue in the run-up to the earnings season.

Twenty five stocks on the 50-scrip index rose for the week, and an equal number of shares moved lower. Bharat Petroleum, Bajaj Finserv and Indian Oil registered weekly gains of 15.60 per cent, 11.26 per cent and 9.88 per cent respectively. On the other hand, Yes Bank, Tata Motors and Zee Entertainment were the top losers, ending the week with losses of 12.61 per cent, 9.87 per cent and 9.29 per cent respectively.

Nifty Weekly Gainers/Losers

(Bharat Petroleum, Bajaj Finserv and Indian Oil enjoyed double-digit percentage gains this week)

NSE Sectoral Index Movement This Week

Index Change Nifty Private Bank +4.12% Nifty Fast-Moving Consumer Goods +3.99% Nifty Financial Services +3.29% Nifty Bank +3.09% Nifty Media -0.40% Nifty Auto -0.68% Nifty Realty -1.36% Nifty IT -1.64% Nifty Metal -1.75% Nifty Pharma -3.61% Nifty PSU Bank -5.81%

(Seven out of the 11 sectoral indices on the National Stock Exchange finished the week on a lower note; still the benchmark Nifty index rose 2.11% thanks to financial and consumer goods sectors)

Analysts say the corporate tax relief drove the rally in the markets.

"Markets continued to remain buoyant throughout the week albeit with a knee jerk reaction to Trump's impeachment news," said Jimeet Modi, Founder and CEO, SAMCO Securities.

Concerns over US President Donald Trump's impeachment inquiry offset optimism over the upcoming trade talks between the US and China among global investors.

Democrats in the US House of Representatives are pursuing an impeachment inquiry against President Donald Trump. More than 300 former national security officials from both Republican and Democratic administrations on Friday endorsed the impeachment inquiry, saying they did not prejudge the outcome but wanted to know more facts.

Trade talks between the United States and China are expected to be held during October 10-11 after months of tit-for-tat moves by both sides which have weakened global growth and driven rollercoaster moves in markets.

"Monthly expiry has also taken all the weak shots out of the market which has played its way to cap the upside volatility for the time being," added Mr Modi of SAMCO Securities.

The rally took a pause as investors squared off their positions ahead of the expiry of monthly derivatives contracts at the end of trade on Thursday.

Analysts say there is still room for more upside in the markets over the near term.

"The rally is likely to continue in the mid- and small-cap segments as we wait for auto monthly sales numbers and festival sales to start," AK Prabhakar, head of research at IDBI Capital, told NDTV.

Mid- and small-cap segments rose around 1 per cent each this week. The S&P BSE Midcap index posted a weekly gain of 1.03 per cent, rising for a third straight week, whereas the Smallcap gauge climbed 0.97 per cent in its fifth positive week in a row.

"The bullishness has started in the market so any dip is a buying opportunity," Mr Prabhakar added.

Analysts will closely monitor the auto sales report cards in the coming week, for any signs of recovery in consumer demand.

The government has in the past one month announced a slew of measures - from withdrawal of higher taxes on foreign investors, a mega bank consolidation plan and a reduction in corporate taxes - to push consumption and growth. Last Friday, it reduced the corporate income tax rate to 22 per cent from 30 per cent.

Meanwhile, Finance Minister Nirmala Sitharaman has exuded confidence that the upcoming festival season will drive consumption. All financial institutions are largely optimistic about the festive season, she said on Thursday.

IDBI Capital's Mr Prabhakar expects the 50-scrip Nifty benchmark to test the levels of 12,150-12,500 by Diwali.