Benchmarks end higher on Tuesday; Nifty reclaims 10,200 mark

Indian equity benchmarks ended the volatile day of trade with quarter a percent gain on Tuesday, with Sensex and Nifty recapturing their crucial 32,600 and 10,200 levels respectively, ahead of Infosys’ second quarter earnings to be released later in the day. Markets traded mostly in green throughout the session, as traders took encouragement with SBI’s report that the government is likely to achieve its fiscal deficit target of 3.2 percent this financial year as the budgeted disinvestment receipts are on track to realise Rs 72,500 crore. The report noted that the government will able to meet the disinvestment target of Rs 72,500 crore as Rs 60,000 crore has already been achieved and hence the fear of low disinvestment receipts is completely unwarranted. Some support also came with Union Minister of Minority Affairs Mukhtar Abbas Naqvi’s statement that the Goods and Services Tax (GST) will remain as a Good and Simple Tax in the coming days to come and will prove to be as a better medium for small traders and businessmen.

Markets witnessed a sharp selloff in last leg of trade to enter into red terrain, but selling proved short-lived and markets soon regained their lost ground with traders taking support with a private report highlighting that post-demonetization and implementation of the GST, the current economic slowdown has bottomed out and the recovery of the economy would critically depend on the initiatives the government takes from now onwards. The report added that the slowdown has bottomed out, however, the stage and pace of recovery would critically depend on the initiatives that the government takes from now onwards to boost the growth momentum, especially the private sector investment. Investors took note that more respite could be on the way Small and Medium Enterprises (SMEs), with the GST council set to ease a string of procedures, including partial relief on penalties on late filing of GST returns. The tax department’s proposal, if approved by the GST Council in its next meeting on November 10 on Guwahati, will lessen the struggles of small businesses still grappling to understand the nuances of the new indirect tax system that was rolled out from July 1.

Firm opening in European counters too aided sentiments with CAC, DAX and FTSE were trading in green, as investors continued to monitor the latest corporate earnings and keep a close eye on Spain's constitutional crisis. Asian markets ended mostly in green on Tuesday led by half a percent gain in Japanise Nikkei on the back of a weaker yen and amid relief over the BOJ policies.

Back home, the Union Cabinet approved the Phase 1 of Bharatmala project to develop and expand approximately 40,000 km of roads at an investment of Rs 3.5 lakh crore in the next 5 years. On the sectoral front, stocks related to infrastructure sector remained on buyers’ radar on report that 331 infrastructure projects, each worth Rs 150 crore or above, have seen a cost overrun of Rs 1.72 lakh crore because of various reasons including delays. Ministry of Statistics and Programme Implementation monitors infrastructure projects worth Rs 150 and above.

Finally, the BSE Sensex surged 100.62 points or 0.31% to 32,607.34, while the CNX Nifty was up by 22.85 points or 0.22% to 10207.70.

The BSE Sensex touched a high and a low of 32,670.37 and 32,502.08, respectively and there were 19 stocks on gaining side as against 12 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.21%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were PSU up by 1.80%, Power up by 1.28%, Utilities up by 1.26%, Telecom up by 0.82% and Basic Materials was up by 0.73%, while IT down by 0.76%, Healthcare down by 0.41%, Consumer Durables down by 0.31%, TECK down by 0.22% and Auto was down by 0.20% were the losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 4.10%, SBI up by 3.56%, NTPC up by 2.83%, ONGC up by 2.56% and Hindustan Unilever up by 1.81%. On the flip side, Tata Motors - DVR down by 1.66%, Tata Motors down by 1.54%, Infosys down by 1.37%, Sun Pharma down by 1.07% and Lupin down by 0.98% were the top losers.

Meanwhile, upstream petroleum regulator Directorate General of Hydrocarbons (DGH) has said that as many as 51 proposals seeking about 60,000 square kilometre of area for oil & gas exploration have been bid for in India's first auction under a new bidding mechanism - Open Acreage Licensing (OAL) policy. To raise domestic production and cut excessive dependence on imports, the country opened 2.8 million square km of sedimentary basins for oil and gas exploration in July.

DGH has stated that the OAL policy, which allows an explorer to study the data available and bid for blocks of their choice, is witnessing an encouraging response from the industry. OAL replaces the old system of government carving out areas and bidding them out. OAL allows investors to carve out their own areas and put in an expression of interest (EoI). Once an EoI is received for an area, it is put on competitive bidding and any company offering the government maximum share of oil and gas is awarded the block.

Under OAL, companies can carve out any area that is currently not under any licensee, and evince interest for doing exploration and production. Once an area is selected, the government will put it up for bidding and any firm offering the maximum share of oil or gas produced from the area would be awarded the block. Till now, the government has been selecting and demarcating areas it feels can be offered for bidding in an exploration licensing round. So far, 256 blocks had been offered for exploration and production since 2000. The last bid round happened in 2010. Of these, 254 blocks were awarded, but as many as 156 have already been relinquished due to poor prospectivity.

The CNX Nifty traded in a range of 10,237.75 and 10,182.40. There were 29 stocks in green as against 21 stocks in red on the index.

The top gainers on Nifty were Zee Entertainment up by 6.65%, Asian Paints up by 4.67%, SBI up by 3.64%, NTPC up by 2.74% and ONGC up by 2.71%. On the flip side, HCL Tech down by 2.60%, Yes Bank down by 2.11%, Indusind Bank down by 1.85%, Tata Motors down by 1.63% and Infosys down by 1.61% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose 2.81 points or 0.04% to 7,527.26, France’s CAC increased 14.37 points or 0.27% to 5,401.18 and Germany’s DAX was up by 20.45 points or 0.16% to 13,023.59.

Asian equity markets ended mostly higher on Tuesday. Chinese shares rose as the Communist Party of China endorsed a second five-year term for 64-year old President Xi Jinping, making him the country's most powerful leader since Mao Zedong. Further, Japanese shares extended gains for a 16th consecutive session on the back of a weaker yen and amid relief over the BOJ policies. On the economic front, the latest survey from Nikkei revealed that activity in Japan's manufacturing sector continued to expand in October, albeit at a slightly slower pace with a manufacturing PMI score of 52.5, down from 52.9 in September.