Late buying helps Sensex to reclaim 31,800 mark; Nifty recaptures 9,950 level

Indian equity benchmarks ended the volatile day of trade with a gain of around half a percent, with frontline gauges recapturing their crucial 31,800 (Sensex) and 9,950 (Nifty) levels, as traders went for bargain hunting after yesterday’s drubbing. Markets made an optimistic start with traders taking encouragement with Prime Minister Narendra Modi’s statement at BRICS Summit 2017 that India is fast changing into one of the most open economies in the world, with improvements on global indices and the biggest ever reform GST weaving the nation into one unified market. Investors also took note that the all powerful GST Council may consider lowering tax on items of common consumption if the high trajectory of collections continues over the next few months. The tax reduction could be either on items of common consumption or a cut in headline rate which will benefit consumers.

However, markets pared all of their initial gains and entered into red terrain in noon deals with market participants turning cautious with the domestic rating agency Crisil lowering its growth forecast to 7 percent for fiscal 2018, down from 7.4 percent earlier, as it sees disruptions arising from the implementation of the new uniform tax regime to continue to impact the economy for a few more quarters. Sentiment was also hampered after activity in India’s dominant services sector contracted for a second straight month in August on disruptions caused by GST hurt new orders.  August’s Nikkei/IHS Markit Services Purchasing Managers’ Index rose to 47.5, from July’s 45.9 but still below the 50 mark that separates expansion from contraction.

Buying which emerged in last hour of trade proved to be the saving grace for domestic markets helping key gauges to end above their crucial psychological levels, with traders getting some support with Union minister Suresh Prabhu’s statement that the Commerce and Industry Ministry will soon bring in a policy framework for facilitating access to global markets for the Indian agriculture produce.

Firm opening in European counters too aided sentiments, as investors brushed off lingering geopolitical concerns and directed their attention to deal-making. Asian markets exhibited mixed trend on Tuesday. Japan’s services sector expanded in August at the slowest rate in six months as the pace of new orders eased, a private survey showed in a sign the economy is losing some momentum after this year’s solid gains.

Back home, stocks related to realty counters edged higher, as the new Minister for Housing and Urban Affairs, Hardeep Singh Puri, said that the government will meet the targets that have been instituted. Stocks of cement companies too ended in green after cement makers raised prices by up to Rs 27 per 50 kg bag in Mumbai. Gold and jewellery stocks too gained their shine, as India’s gold imports in August nearly tripled from a year ago, despite sluggish domestic demand.

Finally, the BSE Sensex surged 107.30 points or 0.34% to 31,809.55, while the CNX Nifty was up by 39.35 points or 0.40% to 9,952.20.

The BSE Sensex touched a high and a low of 31,863.47 and 31,674.23, respectively and there were 18 stocks on gaining side as against 13 stocks on losing side on the index.
The broader indices ended in green; the BSE Mid cap index gained 0.63%, while Small cap index was up by 1.02%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.32%, Realty up by 1.56%, Energy up by 1.26%, Basic Materials up by 1.12% and Oil & Gas was up by 1.02%, while Telecom down by 1.62% was the lone losing index on BSE.

The top gainers on the Sensex were Coal India up by 2.96%, Adani Ports & SEZ up by 1.60%, Bajaj Auto up by 1.58%, Reliance Industries up by 1.34% and Dr. Reddy’s Lab up by 0.89%. On the flip side, Bharti Airtel down by 2.25%, Sun Pharma down by 1.43%, Power Grid down by 0.71%, Tata Motors - DVR down by 0.50% and Lupin down by 0.43% were the top losers.

Meanwhile, telecom Secretary Aruna Sundararajan has said that the new telecom policy (NTP) will comprise a package to boost domestic manufacturing of equipment to reduce import dependence and create local employment. She said that work on the policy blueprint is expected to start after the meeting of the Telecom Commission -- the highest decision making body for the telecommunications sector. She added that the NTP roadmap will be placed before the inter- ministerial panel. To begin with, she noted that the policy draft will be placed in public domain for wider consultations by December or January.

To reduce dependency on telecom import, Sundararajan said that there is need to encourage local telecom companies to not just make for India but also for overseas markets like Middle East Asia and Africa. She also said that it will have to be enabling environment which can catalyse on make in India and added that they will be strengthening the preferential market access policy. Adding further, she said that the NTP will look at incorporating provisions to encourage incorporating of product designs developed in the country. She mentioned that the government also wants to support growth of international companies who have set-up manufacturing facilities.

Talking about connectivity push under the NTP, Telecom Secretary said that the government will focus on connecting around 40,000 villages and increase availability of regular internet access facility from 30 crore people to 70 crore by 2022. Besides, she noted that the NTP will focus to encourage creation of 2.5-3 lakh jobs in the telecom sector over period of next 5 years. In addition, the Department of Telecom will also hold regional consultations for framing up the new policy and has also created working groups to start consultation process.

The CNX Nifty traded in a range of 9,963.10 and 9,901.05. There were 31 stocks in green as against 20 stocks in red on the index.

The top gainers on Nifty were Coal India up by 2.92%, Tech Mahindra up by 2.62%, Ultratech Cement up by 2.56%, Ambuja Cement up by 2.44% and ACC up by 2.07%. On the flip side, Bharti Airtel down by 2.53%, Sun Pharma down by 2.12%, Bharti Infratel down by 1.48%, Bosch down by 1.09% and Aurobindo Pharma down by 0.75% were the top losers.

European markets were trading in green; France’s CAC rose 4.83 points or 0.09% to 5,108.80, UK’s FTSE 100 increased 4.9 points or 0.07% to 7,416.37 and Germany’s DAX was up by 83.45 points or 0.69% to 12,185.66.

Asian equity markets ended mixed on Tuesday, with Japanese markets succumbing to selling pressure to hit a one-week low, after reports that the government is drafting a plan to bring thousands of South Korea-based nationals to safety in the event of a military conflict with North Korea. South Korea's Asia Business Daily, citing an unidentified source, reported on Tuesday that North Korea had been spotted moving a rocket that appeared to be an intercontinental ballistic missile (ICBM) towards its west coast. Meanwhile, Chinese shares ended higher after a private business survey showed activity in China's services sector expanded at a faster pace in August.