Post Session: Quick Review

Indian equity benchmarks traded jubilantly throughout the day and ended the session on a firm note. Today’s rally was driven by banking and infrastructure stocks on governments move which will shape the economic growth from consumption led to investment led. The benchmarks traded jubilantly and scaled new highs in early deals as traders took support after government on Tuesday unveiled a Rs 2.11-lakh crore support for public sector banks (PSBs), struggling with mounting bad loans, to spur genuine infrastructure lending for upcoming mega projects. The move is aimed at creating jobs and boosting economic growth, which slumped to a three-year low of 5.7% in the first quarter of the current financial year. Separately, the government also approved the biggest highway construction plan so far in the country, to develop approximately 83,677 km of roads at an investment of Rs 6.92 lakh crore by 2022. The highway construction programme is aimed at pushing economic activity and generating at least 14.2 crore man-days across the country over the next five years.

Some support also came on report that the government has collected Rs 92,150 crore as Goods and Services Tax (GST) in September from 42.91 lakh business. The finance ministry said that of this, Rs 14,042 crore is on account of central GST, while state GST is to the tune of Rs 21,172 crore. Integrated GST collections stood at Rs 48,948 crore, of which Rs 23,951 crore was on account of imports. Meanwhile, Finance Minister Arun Jaitley has said that Indian economy is on a strong wicket with sound macro-economic fundamentals. He added that India has been the fastest growing major economy for the last three years and the attempt is to maintain high growth rate in coming years. Adding to the gains, Economic Affairs Secretary Subhash Garg said that GST has been the biggest tax reform, along with other ones like demonetization and the battle against black money. The secretary added that the current economic slowdown is bottoming out. Fiscal deficit is under control and that the government is unlikely to overshoot its target of 3.2 percent fiscal deficit at the end of the current fiscal year.

On the global front, Asian markets closed mostly in green. Japan’s government may be able to declare that the economy has made a sustained exit from deflation before it implements a scheduled sales tax hike in October 2019. Such an announcement would help Prime Minister Shinzo Abe, who drove his ruling Liberal Democratic Party to victory, make the case that his Abenomics stimulus policies are working. The European markets were trading mostly in green. Britain’s economy unexpectedly picked up speed in the three months to September, putting the Bank of England firmly on track to raise interest rates next week for the first time a decade. Output rose 0.4 percent compared with 0.3 percent growth in the quarter to June.

Back home, PSU banking stocks surged after the Centre announced a Rs 2.11-lakh-crore capital infusion plan for state-owned banks. Shares of companies in the road sector were buzzing in today’s trade as the government approved to build 83,677 km of highways over the next five years at a cost of about Rs 6.92 lakh crore which includes the ambitious Bharatmala project. General Insurance Corporation of India closed in green, regardless of shares getting listed below the issue price on the National Stock Exchange. The Rs 11,370-crore initial public offer (IPO) of General Insurance Corporation, which was opened during October 11-13, was oversubscribed 1.38 times.

The BSE Sensex ended at 33026.08, up by 418.74 points or 1.28% after trading in a range of 32804.60 and 33117.33. There were 19 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was up by 0.43%, while Small cap index was down by 0.20%. (Provisional)

The top gaining sectoral indices on the BSE were PSU up by 7.82%, Bankex up by 4.75%, Capital Goods up by 3.16%, Industrials up by 1.91% and Telecom up by 1.54%, while Consumer Durables down by 1.26%, Healthcare down by 1.11% and Realty down by 0.29% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 26.54%, ICICI Bank up by 14.88%, Larsen & Toubro up by 5.26%, Axis Bank up by 5.12% and Bharti Airtel up by 2.79%. (Provisional)

On the flip side, Kotak Mahindra Bank down by 5.39%, HDFC Bank down by 3.92%, HDFC down by 2.59%, Lupin down by 2.12% and Sun Pharma down by 1.96% were the top losers. (Provisional)

Meanwhile, amid back-ended redemption of state development loans (SDLs) and funding of crop loan waivers by some states, state government’s market borrowings are expected to increase in the second half (H2) of the current fiscal (FY2018). Credit rating agency, ICRA in its latest report has estimated that borrowing may rise to Rs 3.0-3.2 trillion in H2 FY2018 from Rs 1.8 trillion in H1 FY2018. It also estimates that around three-quarters of the total SDL redemption of over Rs 700 billion, due in current fiscal, is to be redeemed in second half.

The rating agency further predicted that total SDL borrowings for the current fiscal year could be in the range of Rs 4.8-5 trillion, which is higher than its initial baseline estimate of Rs 4.5 trillion for the year. As per the report findings, a 42.7 percent year-on-year (Y-o-Y) growth in SDL issuance in Q2 FY2018 is on the back of a mismatch of revenue and expenditure of state governments emanating from transitional cash flow issues related to the migration to the goods and services tax (GST).

ICRA also noted that the compensation for loss of revenue related to the shift to the GST and the release of the share of the state governments in Integrated GST (IGST) would start flowing from the central government to the state governments and this would ease their liquidity situation during H2 FY2018.

The CNX Nifty ended at 10294.15, up by 86.45 points or 0.85% after trading in a range of 10240.90 and 10340.55. There were 24 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were SBI up by 26.90%, ICICI Bank up by 14.56%, Ultratech Cement up by 5.75%, Larsen & Toubro up by 5.33% and Axis Bank up by 4.88%. (Provisional)

On the flip side, Indiabulls Housing down by 5.62%, Bajaj Finance down by 5.16%, Kotak Mahindra Bank down by 4.99%, Yes Bank down by 4.79% and HDFC Bank down by 3.85% were the top losers. (Provisional)

The European markets were trading mostly in green; Germany’s DAX increased 10.2 points or 0.08% to 13,023.39, France’s CAC increased 15.36 points or 0.28% to 5,410.16, while UK’s FTSE 100 decreased 13.42 points or 0.18% to 7,513.12.

Asian equity markets ended mostly higher on Wednesday after solid earnings reports from heavyweights Caterpillar and 3M as well as promises of tax reform from the Trump administration helped the Dow Jones Industrial Average post its biggest gain in more than a month overnight. Chinese shares ended higher as investors awaited the announcement by Chinese President Xi Jinping later in the day of new members of the Politburo Standing Committee, the country's supreme political body. Meanwhile, Japanese shares snapped a 16-day winning streak as investors cashed in on recent gains, although higher US yields supported financial stocks.