Indian benchmarks display spirited performance; Sensex rallies over 500 pts

Value buying, coupled with broadly positive global cues and raising hopes of rate cut by the central bank following easing inflationary pressures lifted the Indian equity markets on Tuesday.  Investors continued to build hefty positions across the board as sentiments got a boost after mixed US economic data helped ease worries about a possible rate hike by the Federal Reserve in November. On the domestic front, investors’ morale remained upbeat with private report stating that India’s current account deficit is likely to stay below 1 per cent of GDP this year, largely due to a sharp fall in the trade deficit as against last year. Besides, appreciation in Indian rupee against dollar added to the optimistic sentiments.  The rupee was strong against the US dollar by 20 paise at 66.69 at the time of equity markets closing as compared to its previous close of 66.89. Some support also came with Global rating agency Moody’s report that the draft bill to establish a new regime for resolution of troubled banks in India is credit positive, as it will help to enhance overall stability of the financial system. The draft bill which seeks to establish Resolution Corporation will have to go through multiple steps before becoming law. Meanwhile, investors were keeping an eye on the government meeting on the goods and services tax (GST) for clarity on rates. The three-day meeting of the GST Council, comprising federal and state finance ministers, will decide the main tax rate and those for different sectors. Almost 20-25 per cent of all taxable goods, including those consumed by the middle class, could come under the peak rate.

On the global front, Asian share markets ended higher on Tuesday, with Hang Seng surging 1.5 percent and China's Shanghai Composite rising 1.4 per cent amid a rebound in global oil prices. Japanese shares ended higher ahead of the earnings season starting later this week. Despite the bounce in risk-sensitive assets in Asia, volumes were light with markets hugging well-worn trading ranges. Investors are awaiting Chinese data due this week, including the September quarter gross domestic product on Wednesday, after last week's trade figures raised concerns about the health of the world's second-biggest economy. Meanwhile, European markets were trading sharply higher with Germany’s DAX, Britain's FTSE 100 and France's CAC 40 indices gaining over a percent each.

Back home, the local benchmark indices got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The bourses further capitalized on the momentum and spurted in noon trades on the back of broad based bottom fishing in undervalued stocks. The northbound journey only concluded with the close of the session helping the key gauges in recovering the ground lost in last one week. Eventually the NSE’s 50-share broadly followed index Nifty, got buttressed by close to two percent to settle above the crucial 8,650 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over five hundred points and closed above the psychological 28,000 mark. Moreover, the broader markets too participated equally in the rally and closed with gains of over a percent. On the BSE sectoral space, buying was evident across the board and investors piled up hefty positions in the high beta Banking counter which rocketed by over two percent, while the Capital Goods, IT and Metal pockets too gained from strength to strength and climbed by over one and half percent each. The market breadth remained optimistic as there were 1905 shares on the gaining side against 926 shares on the losing side while 206 shares remained unchanged.

Finally, the BSE Sensex surged 520.91 points or 1.89% to 28050.88, while the CNX Nifty ended up by 157.50 points or 1.85% to 8,677.90. 

The BSE Sensex touched a high and a low 28064.39 and 27652.76, respectively. There were 28 stocks on gainers side against 2 stocks declining on the index. The broader indices ended in green; the BSE Mid cap index rose 1.89%, while Small cap index was up by 1.30%.

The top gaining sectoral indices on the BSE were Bankex up by 2.37%, Capital Goods up by 2.07%, IT up by 1.84%, Metal up by 1.82% and TECK up by 1.68%, while there was not a single losing index on the BSE sectoral front.

The top gainers on the Sensex were Adani Ports & SEZ  up by 6.30%, ICICI Bank up by 4.58%, HDFC up by 3.82%, Tata Steel up by 3.46% and Larsen & Toubro up by 2.85%. On the flip side, ONGC down by 0.75% and Asian Paints down by 0.49% were the few losers.

Meanwhile, the Cabinet is likely to clear the plan to cut the government’s stake in around 20 Public Sector Undertaking (PSUs) on October 19, including several profit-making entities, restarting equity sale in public sector companies after a 12-year gap.

The companies identified apparently include the profitable Bharat Earth Movers, Certification Engineers International and others such as loss-making Scooters India. Also, there will be a detailed review of the plan to shed 10% stake in public sector general insurance companies, aimed at helping the insurers raise funds to take on private sector players. The aim of the policy is to ensure that these PSUs are run professionally and there is greater value in these entities, paving the way for the government to dilute its stake in the years. 

The government think-tank NITI Aayog that firmed up the disinvestment policy for the government, had suggested strategic sale in several PSUs that would result in bringing down the Centre's share in these entities to under 50%. From a list of 74 loss-making companies identified by NITI Aayog, the government is looking to sell 22 companies, including BPCL, and is going to wind up several others.

The CNX Nifty traded in a range of 8,685.10 and 8,555.90. There were 47 stocks in green against 4 in red on the index.

The top gainers on Nifty were Adani Ports & Special up by 6.84%, ICICI Bank up by 4.06%, HDFC up by 3.94%, Tech Mahindra up by 3.79% and Tata Steel up by 3.68%. On the flip side, Bharti Infratel down by 1.24%, Asian Paints down by 0.67%, ONGC down by 0.61% and BPCL down by 0.47% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 74.64 points or 1.07% to 7,022.19, Germany’s DAX increased 127.74 points or 1.22% to 10,631.31 and France’s CAC increased 55.87 points or 1.26% to 4,506.10.

Asian stocks ended in green on Tuesday as oil prices inched higher and after mixed US economic data helped ease worries about a possible rate hike by the Federal Reserve in November. Financials and commodity-related stocks paced the gainers, even as underlying sentiment remained somewhat cautious ahead of a slew of Chinese data due on Wednesday and the European Central Bank meeting on Thursday. Japanese shares ended modestly higher ahead of the earnings season starting later this week. Chinese stocks ended higher as Shanghai's US dollar-denominated B shares stabilized following the previous day's sell-off.