Bulls tighten grip on Dalal Street; Sensex reclaims 32,100 mark

Bulls tightened their grip on Dalal Street with Sensex recapturing its crucial 32,100 level, while Nifty ending just shy of 10,100 mark, ahead of the macro data of industrial production for July scheduled to be announced later in the day. In the extremely buoyant session of trade, benchmark equity indices after getting positive start, went on steadily gaining ground and halted only at day’s high by close of trade. Sentiments remained up-beat since morning with report that direct tax collections in the first five months of the current fiscal grew 17.5% to Rs 2.24 lakh crore, mainly on account of income tax mop-up from individuals. This is 22.9% of the total budget estimates of direct taxes, which comprise personal income and corporate tax, for the current financial year. There was additional encouragement with the reports that government was expecting a double-digit improvement in India’s rank in the global index on ease of doing business, likely to be announced by the World Bank next month, based on the feedback shared by the multinational organization.

Some support also came with Former Reserve Bank of India’s (RBI) governor Raghuram Rajan’s statement that reviving stalled projects and a thrust on infrastructure will be the key to India reaching the 8% economic growth in the short-term. He added that India should focus on removing the bottlenecks on all stalled projects in order to achieve 8-9% growth. Adding to the optimism, global rating agency ARC Ratings, in its latest report has affirmed the ‘BBB+’ rating to the India and maintained a stable outlook on expectation of a strong economic growth. The rating agency also affirmed its ‘A-’ foreign currency and ‘A’ local currency country ceilings for the country. It has said that a solid outlook for economic dynamism continues to drive the sovereign ratings and added that India continues to enjoy solid economic performance and a strong medium term growth outlook, with real GDP growing 7.1% in FY2017.

Markets extended gains with European counters making mostly a green start. British inflation hit its joint highest in more than five years in August as households paid more for fuel and clothing, complicating the Bank of England’s job this week of explaining why it is not raising interest rates. Asian markets rallied on Tuesday, with investors breathing a sigh of relief as North Korean fears eased slightly and the worst-case scenario from Hurricane Irma looked to have been avoided.

Back home, a RBI paper has said that farm loan waiver amounting to Rs 88,000 crore likely to be released in 2017-18 by seven states, including Uttar Pradesh and Maharashtra, may push inflation on permanent basis by 0.2 per cent. On the sectoral front, auto stock remained in top gear after data released by industry body Society of Indian Automobile Manufacturers (SIAM) showed that passenger vehicle sales grew 14% year on year at 2,94,335 units in August, while two-wheeler sales hit a record 18,91,062 units, beating the previous monthly high of 18,68,952 posted in September 2016.

Finally, the BSE Sensex soared 276.50 points or 0.87% to 32,158.66, while the CNX Nifty was up by 87.00 points or 0.87% to 10,093.05.

The BSE Sensex touched a high and a low of 32,172.46 and 31,950.24, respectively and there were 26 stocks on gaining side as against 5 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index surged 1.08%, while Small cap index was up by 1.01%.

The gaining sectoral indices on the BSE were Realty up by 2.11%, Healthcare up by 1.68%, Oil & Gas up by 1.64%, Industrials up by 1.45% and FMCG was up by 1.24%, while there were no losers on the BSE sectoral front.
The top gainers on the Sensex were Tata Steel up by 3.30%, Tata Motors - DVR up by 3.26%, Sun Pharma up by 3.17%, Tata Motors up by 3.14% and Hindustan Unilever was up by 2.26%. On the flip side, Wipro down by 1.00%, ONGC down by 0.76%, Hero MotoCorp down by 0.72%, NTPC down by 0.38% and Maruti Suzuki was down by 0.06% were the top losers.

Meanwhile, global rating agency ARC Ratings, in its latest report has affirmed the ‘BBB+’ rating to India and maintained a stable outlook on expectation of a strong economic growth. The rating agency also affirmed its ‘A-’ foreign currency and ‘A’ local currency country ceilings for the country. It has said that a solid outlook for economic dynamism continues to drive the sovereign ratings and added that India continues to enjoy solid economic performance and a strong medium term growth outlook, with real GDP growing 7.1% in FY2017. The report also highlighted that this performance clearly exceeds the average performance of peers and is exceptional in the context of expectations for moderate global growth plagued by downside risks associated with increased protectionism, political uncertainty and geopolitical risks.

The rating action comes even as the first quarter Gross Domestic Product (GDP) growth slowed to a three-year low of 5.7%. As per the report, lower growth is due to the short-term negative side effects of note ban, and GST implementation as well as the effects of the further deterioration of the twin balance sheet problem that affects the economy. Besides, the report added that the rating action is also supported by a comfortable external position marked by low external debt of nearly 20% of GDP, an unblemished debt repayments record, external liquidity from large diaspora and favourable demographics that fuel demand.

ARC Ratings further said that the key risks to the ratings are weak government finances, characterised by low revenue yield and extreme inefficiencies in the government sector, a large government debt and sizeable fiscal deficits, serving as the main credit constraints. It also warned that twin balance sheet problem, with weaknesses in the banks given the high non-performing assets (NPAs) and insufficient capital levels, combined with high corporate sector leverage (50% of GDP) are the major impediments to higher growth.

The CNX Nifty traded in a range of 10,097.55 and 10,028.05. There were 41 stocks in green as against 10 stocks in red on the index.

The top gainers on Nifty were BPCL up by 4.36%, GAIL India up by 3.85%, Tata Motors up by 3.53%, Bank of Baroda up by 3.46% and Sun Pharma was up by 3.42%. On the flip side, Indusind Bank down by 2.86%, Wipro down by 1.06%, Hero MotoCorp down by 0.78%, ONGC down by 0.61% and Power Grid was down by 0.51% were the top losers.

European markets were trading mostly in green; France’s CAC increased 32.4 points or 0.63% to 5,209.11 and Germany’s DAX was up by 70.98 points or 0.57% to 12,546.22, while UK’s FTSE 100 was down by 12.84 points or 0.17% to 7,400.75.

Asian equity markets ended higher on Tuesday amid receding worries about Hurricane Irma and North Korea as the enormous storm weakened and the UN Security Council unanimously steeped up sanctions against North Korea for its latest missile and nuclear tests. Japanese shares hit their highest level in a month as a weaker yen bolstered exporters and financials also gained ground in the wake of sharp gains in US bond yields and lower-than-expected damage from Hurricane Irma. Chinese shares inched higher, although gains remained modest ahead of August industrial output, retail sales and fixed-asset investment data due this week.