Indian benchmarks end at record high; Nifty closes above 9300 for the first time

Euphoric Indian equity indices showcased an impressive performance on Tuesday by conquering the crucial 9,300 (Nifty) and 29,900 (Sensex) levels as they got underpinned by a series of encouraging leads. Monday's optimism got spilled over into the Tuesday's session helping the local indices in extending the winning momentum for second successive session as encouraging global developments buttressed domestic sentiments. Investors continued to build hefty positions across the board as sentiments got a boost after a centrist victory in the first round of the French presidential election. Polls show Emmanuel Macron defeating anti-euro nationalist Marine Le Pen by as much as 30% points in the second round of the French presidential election in two weeks. Sentiments were also bolstered by a string of optimistic quarterly results including from Reliance Industries, which were announced yesterday post market hours. For the March quarter, RIL's consolidated net profit rose 12.3% to Rs 8,046 crore, against Rs 7,167 crore for the same period a year ago. Its turnover in the March quarter rose 45.2% year-on-year to Rs 92,889 crore, largely meeting street expectations for net profit. Further, investors’ sentiments remained buoyant with Finance Minister Arun Jaitley's statement that India will continue to grow at 7-8 per cent rate, an 'absolute normal' for the nation under the current global environment. Jaitley also said as far as the economy is concerned, all the decisions taken by the Modi-Government are consistently in one direction. Moreover, paving the way for July 1 roll out of the GST, the Bihar assembly in a special session unanimously passed the Goods and Services Tax Bill, 2017. Prime Minister Narendra Modi has said the consensus on Goods and Services Tax (GST) reflects the spirit of 'one nation, one aspiration, one determination'. Meanwhile, banking stocks gained traction on the report that mutual fund managers continued to be bullish on bank shares, with their allocation to the sector reaching an all-time high of over Rs. 1.26 lakh crore at the end of March 2017. Also, Indian Bank has reported solid performance in January-March quarter as profit soared 3.4 times to Rs 319.7 crore compared with Rs 93.62 crore in year-ago quarter despite higher provisions. Net interest income, operating profit and tax credit boosted profitability.

On the global front, Asian markets ended mostly higher on Tuesday as European political risks faded and oil prices rebounded after six consecutive sessions of losses. A candidate seen as pro-business won the most votes on Sunday, and many investors expect him to win a runoff against the remaining anti-EU candidate, which is set for May 7, 2017. France's outgoing president, Francois Hollande, has urged voters to back centrist Macron in the second round of the election on May 7, warning that far-right leader Marine Le Pen would be a "massive risk" for the economy and jobs. However, investors are cautious as they kept an eye on North Korea, which is marking the 85th anniversary of the Korean People's Army on Tuesday, amid news that the USS Carl Vinson aircraft carrier-led battle group is nearing the Korean peninsula. Meanwhile, Safe-haven assets, including the yen and gold remained under pressure, while the Canadian dollar fell after the US announced new duties averaging 20% on Canadian softwood lumber imports. The Canadian currency tumbled to a four-month low as the US dollar strengthened 0.4 per cent to C$1.3554.

Back home, the local benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from global markets. Thereafter, the frontline indices slowly and steadily started gathering steam and surged by over half a percent by late morning trades. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session's highest levels in dying moments. Eventually the NSE's 50-share broadly followed index Nifty, convalesced by close to a percent to settle above the crucial 9,300 support level, while Bombay Stock Exchange's Sensitive Index, Sensex accumulated close to three hundred points and closed above the psychological 29,900 mark. On the BSE sectoral space, hefty buying was evident across the board as not even a single sectoral index went home in the negative territory. Investors piled up hefty positions in the beaten down Telecom counter which rocketed by over two percent, while the FMCG index too showed strong gains and jumped by about two percent. While high beta sectors like - Realty, Oil & Gas and Energy too soared in the session.

The market breadth remained optimistic, as there were 1467 shares on the gaining side against 1444 shares on the losing side, while 169 shares remained unchanged.

Finally, the BSE Sensex gained 287.40 points or 0.97% to 29943.24, while the CNX Nifty was up by 88.65 points or 0.96% to 9,306.60. 

The BSE Sensex touched a high and a low of 29961.82 and 29780.84, respectively and there were 23 stocks on gainers side as against 7 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained 1.06%, while Small cap index was up by 0.58%.

The top gaining sectoral indices on the BSE were Telecom up by 2.62%, FMCG up by 1.67%, Realty up by 1.26%, Oil & Gas up by 1.23% and Energy up by 1.20%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.40%, Axis Bank up by 3.40%, Bharti Airtel up by 3.18%, Hero MotoCorp up by 2.93% and Asian Paints up by 2.40%. On the flip side, TCS down by 0.76%, Cipla down by 0.58%, GAIL India down by 0.39%, NTPC down by 0.30% and HDFC Bank down by 0.08% were the top losers.

Meanwhile, reiterating that the problem of bad loans in the banking system is not 'insurmountable' for India, Finance Minister Arun Jaitley has said that a large economy like India can deal with this problem, as it is not a problem spread over hundreds or thousands of accounts but is confined to only 20 to 30 big accounts. However, he stated that the problem of Non-performing assets (NPAs) has just persisted too long and is certainly adversely impacting the banking system.

Jaitley stressed that at present, the resolution of NPAs is a top priority for the government as it will encourage private investments and in order to resolve the problem, some precipitative action will have to be taken and this may involve some hair cuts by the banks, which would be a bona fide commercial consideration. He also added that the defaulting companies will have to find partners and go in for either change of management or search of investors.

The Finance Minister blamed the anti-corruption laws of pre-liberalisation era as one of the constraints because of which banks are not able to take bold decisions. He pointed that one of the fundamental flaws in the law has been that erroneous decision-making, which may be taking haircuts to settle gets identified a corruption,' and this has made the banking bureaucracy defensive in tackling the NPA. He also stated that parliamentary committee has approved changes to the law so that bureaucrats 'can make decisions on commercial considerations than be constrained as to future consequences of the action itself.'

The CNX Nifty traded in a range of 9,309.20 and 9,250.35. There were 38 stocks in green as against 13 stocks in red on the index.

The top gainers on Nifty were Bharti Infratel up by 4.76%, Axis Bank up by 3.90%, BPCL up by 3.55%, M&M up by 3.35% and IOC up by 3.31%. On the flip side, Tata Power down by 1.10%, Cipla down by 0.94%, TCS down by 0.78%, NTPC down by 0.72% and Aurobindo Pharma down by 0.71% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 increased 11.66 points or 0.16% to 7,276.34, France’s CAC increased 12.86 points or 0.24% to 5,281.71, while Germany’s DAX decreased 8.03 points or 0.06% to 12,446.95.

Asian equity markets ended in green on Tuesday as European political risks faded and oil prices rebounded after six consecutive sessions of losses. Meanwhile, investors kept a wary eye on North Korea as the country celebrates the 85th anniversary of the Korean People's Army, amid signs Pyongyang could soon conduct another nuclear test in defiance of United Nations sanctions. Japanese shares ended higher as the yen weakened amid easing fears over the risk of a French exit from the currency union. Chinese shares steadied after steep losses the previous day amid concerns over the regulatory crackdown on shadow banking.