NIFTY Midcap 100 index surges nearly 1.5%, hits record high; here is why

The Indian equity benchmarks logged in strong gains on Friday, July 10, with the SENSEX and NIFTY50 indices rising 1% each on hopes of earnings recovery in the first quarter of current financial year.

Broader markets outperformed their larger peers during the session as NIFTY Midcap 100 index surged as much as 1.46% to hit a record high of 63,076.50 while NIFTY Smallcap 100 index advanced as much as 1.7% to hit a fresh 52-week high of 19,444.35.

The sharp up move in midcap and smallcap shares came on the back of optimism about earnings recovery in Q1 after Tata Consultancy Services, the country's largest IT company, surprised market participants by posting better than anticipated quarterly earnings.

TCS post market hours on Thursday reported a net profit of ₹13,349 crore in April-June period, marking an annual increase of 5% from ₹12,760 crore in the same period last year on the back of strong revenue from artificial intelligence (AI) services.

The company said that it earned $2.6 billion in revenue from providing AI services, marking a sequential increase of 14%. Strong pipeline of AI deals reported by TCS also gave a boost to fortunes of other companies in IT sector, analysts noted.

Strong buying interest in midcap and smallcap shares was evident from the fact that 83 shares in the NIFTY Midcap 100 index ended higher while 84 shares closed higher in the NIFTY Smallcap 100 index.

Indian Bank was top gainer in the NIFTY Midcap 100 index, the stock surged 10% to close at ₹873 after it surprised the street by posting strong earnings in April-June period.

The state-run lender reported a net profit of ₹3,273 crore in the first quarter of current financial year, marking an increase of 10% from ₹2,973 crore in the same period last year. The jump in profit came on account of lower provisions for bad loans and improvement in asset quality.

Indian Bank's provisions for bad loans dropped to ₹376 crore at the end of the first quarter compared with ₹748 crore in the previous quarter and ₹387 crore in the year-ago period.

Its asset quality showed an improvement in April-June period as its gross non-performing assets (NPA), as a percentage of total advances, improved to 1.86% compared with 3.01% in the corresponding period last year.

Kalyan Jewellers, Paytm, Godrej Properties, OFSS, Bank of India, Persistent Systems, SBI Card, IREDA, Motilal Oswal and JSW Energy also rose between 4% and 8%.

Zensar Technologies was top gainer in the NIFTY Smallcap 100 index, the stock closed 13.59% higher at ₹508, mirroring gains in other IT stocks.

MRPL, Brigade Enterprises, Firstsource Solutions, CDSL, Signature Global, Bandhan Bank, RBL Bank and Sagility also rose between 4.3% and 8.13%.