Bulls continue to roar on Dalal Street; Nifty surpasses 10,400 mark

Wednesday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls tightened their grip on Dalal Street, with Nifty and Sensex hitting fresh record highs and ending above their crucial 10,400 and 33,600 levels, respectively. The market mood remained up-beat through the day and benchmarks fervently gained strength to strength, as investors continued hunt for fundamentally strong stocks. Key gauges made a gap-up opening on report that India’s ranking in the World Bank ease of doing business survey for 2018 climbed to record 30 notches to 100, as a range of regulatory and policy reforms put in place by the Union and state governments over the past four years started delivering results. The survey also recognized India as one of the top five reformers in this year’s assessment. Finance minister Arun Jaitley has said the target of making it to the top 50 countries in the Doing Business ranking now seems doable. Apart from the World Bank report, the markets were also lifted by firm opening in European markets. Further support also came with Department of Industrial Policy and Promotion (DIPP) secretary Ramesh Abhishek’s statement that the government is working with the World Bank to recognise over 200 reforms that will help propel India into the top-50 bracket in ease of doing business

Domestic bourses continued to move northward till end at all time high levels, with up-beat economic data also providing strength. The Core sector growth hit a six-month high in September. The index of eight core industries was up 5.2% in September, compared with 4.4% in August and 5.3% in September last year. Also, fiscal deficit improved to 91.3% of the budget estimate at the end of September from 96.1% at the end of August as revenues picked up pace. Fiscal deficit is pegged at Rs 4.99 lakh crore at the end of September, down about Rs 26,000 crore from August as second instalment of corporate taxes allowed revenue to exceed spending in the month. The markets participants paid no heed towards the report that growth in India’s manufacturing sector lost momentum in October month. The Nikkei India Manufacturing Purchasing Managers’ Index fell from 51.2 in September to 50.3 in October.

Global cues too remained supportive with European markets making a firm start, despite a terrorist attack in New York, as investors focused on earnings reports. The UK manufacturing sector continued to expand at a solid pace at the start of the fourth quarter. Asian markets ended mostly in green terrain on Wednesday. Soaring memory chip sales helped South Korea exports record 12 consecutive months of growth in October, evidence Asia’s fourth largest economy is stepping up a gear.

Back home, investors took note that India could review the application of the highest 28% slab under the Goods and services Tax (GST) and consider imposing a lower rate on items of frequent use. Items in the 28% slab include washing machines, refrigerators, electrical fittings, cement, ceiling fans, watches, automobiles, tobacco products, nutritional drinks, auto parts, plastic furniture and plywood. Some of the goods placed in that bracket are manufactured by MSMEs and they are feeling some pressure. On the sectoral front, banking stocks remained in focus, as the Country’s largest lender, State Bank of India has announced a cut in marginal cost-based lending rates (MCLR) across maturities by 5 basis points.

Finally, the BSE Sensex soared 387.14 points or 1.17% to 33,600.27, while the CNX Nifty was up by 105.20 points or 1.02% to 10,440.50.

The BSE Sensex touched a high and a low of 33,651.52 and 33,340.62, respectively and there were 17 stocks on gaining side as against 14 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.35%, while Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Telecom up by 3.93%, Realty up by 2.93%, Bankex up by 2.01%, Metal up by 1.89% and FMCG up by 1.33%, while Consumer Durables down by 0.61%, Auto down by 0.20%, Healthcare down by 0.16%, Utilities down by 0.13% and Consumer Discretionary Goods & Services was down by 0.10% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 8.19%, SBI up by 4.58%, ICICI Bank up by 4.42%, HDFC up by 2.22% and Axis Bank up by 2.05%. On the flip side, Dr. Reddys Lab down by 2.90%, Power Grid down by 1.06%, Sun Pharma down by 0.89%, Hero MotoCorp down by 0.82% and Bajaj Auto down by 0.60% were the top losers.

Meanwhile, the rating agency, CRISIL in its latest report has said that the healthcare sector in India is expected to see 15 percent revenue growth annually over the next three financial years (FY2018-FY2020) on the back of rapid expansion in health insurance coverage through government-sponsored schemes. It also noted that the Rs 4.8 lakh crore healthcare delivery sector in India have been showing very robust demand growth and stable cash flows, and should maintain its momentum despite regulatory hiccups.  

As per the report, while strong demand will necessitate capital expenditure, stable cash flows from existing operations will continue to support credit profiles. However, it said that profitability of hospitals could see some pressure due to regulatory interventions, and they are expected to cope by adjusting cost and pricing structures. Adding further, it revealed that the number of people covered by health insurance has nearly doubled to 42 crore in the past three fiscals. It also noted that large corporate chains with over Rs 400 crore revenue are expected to see increasing capacity by 25% between fiscals 2018 and 2019, entailing an investment of Rs 5,000 crore.

The rating agency further said that credit profiles of hospital firms are likely to stable despite large capex, backed by strong demand growth, stable cash flows from existing beds, and strengthening of business profiles through geographical diversification.  It noted that prudent funding mix and longer loan-repayment tenure will further support credit profiles amid large capex. It pointed out that another factor that supports credit profiles is the measured approach that corporate chains take when undertaking capex to enter new markets.

The CNX Nifty traded in a range of 10,451.65 and 10,383.05. There were 29 stocks in green as against 21 stocks in red on the index.

The top gainers on Nifty were Bharti Airtel up by 9.21%, SBI up by 4.64%, ICICI Bank up by 4.42%, Vedanta up by 3.47% and Hindalco up by 3.09%. On the flip side, Eicher Motors down by 4.04%, Bharti Infratel down by 3.81%, Dr. Reddys Lab down by 3.01%, UPL down by 2.16% and HCL Tech down by 1.50% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 14.66 points or 0.2% to 7,507.74, France’s CAC gained 25.19 points or 0.46% to 5,528.48 and Germany’s DAX was up by 208 points or 1.57% to 13,437.57.

Asian equity markets ended mostly higher on Wednesday, lifted by optimism over global economic growth and corporate earnings. Data showed that US consumer confidence in October rose to its highest level in nearly 17 years and as China's Caixin manufacturing Purchasing Managers' Index for October matched expectations. Meanwhile, the US Federal Reserve is also likely to be in focus, with the central bank due to announce its latest monetary policy decision later in the day. While the Fed is expected to leave interest rates unchanged, investors will be looking for clues about the possibility of a rate hike in December. Japanese shares ended higher, cheered by booming profits for Japan Inc. including exporters such as Sony and Nitto Denko.