Markets hit fresh record highs on Friday

Friday turned out to be a fabulous day of trade for Indian equity benchmarks where Nifty and Sensex once again scaled fresh record highs and ended above 10,450 and 33,600 levels, respectively. Despite some initial volatility, markets gained momentum and traded jubilantly throughout the session, as sentiments remained up-beat with the government’s statement that it has approved foreign direct investment (FDI) proposals worth Rs 24.56 crore, including one from Sterling Commerce Solutions India. Markets extended their northward journey mainly after the Nikkei India Services Purchasing Managers’ Index rose to 51.7 in October from September’s 50.7 due to greater inflows of new business. The report enlightened that service providers retained an optimistic outlook regarding business activity over the coming 12 months, while the labor market was further reinforced as firms raised their payroll numbers over the month.

Traders also took some comfort with Prime Minister Narendra Modi’s statement that starting business in India is easier than ever before as procedures have been simplified, archaic laws repealed and compliance requirements reduced. Meanwhile, responsible or sustainable investment in India is at a niche stage as assets deployed under this strategy amount to nearly $31 billion, while globally it stood at a whopping $22.89 trillion. Adding to the optimism, former RBI governor Raghuram Rajan termed the government’s announcement to infuse Rs 2.11 lakh crore in PSU banks as good news saying it is important for banks to have capital for lending going forward. He added that public sector banking system is a big part of Indian system and it is about 70%. Investors took note of the Reserve Bank of India (RBI) statement that corporate borrowers who fail to get a Legal Entity Identifier (LEI) number from banks won’t be given credit. The schedule for getting the LEI number is spread out till December 2019 and depends on exposure.

Positive opening in European counters too aided sentiments with CAC, DAX and FTSE trading in green in early deals, as investors monitored a fresh batch of corporate earnings. Asian markets ended mostly in green, as sentiments remained up-beat with the release of US tax reform bill as well as the announcement of Jerome Powell as the next Federal Reserve Chair.

Back home, auto stocks remained in top gear on report that domestic commercial vehicle sales seems to be back on track since July 2017, driven by pent-up demand post-GST, healthy replacement-led demand, especially in the tractor trailer segment owing to stricter implementation of CMVR regulations and pick-up in construction and mining activity, driving demand for tipper trucks. Aviation stocks flies higher with report that the government is developing a comprehensive 25-year master plan for airports in the country to keep pace with air traffic growth. Select stocks from IT space remained on buyers’ radar with Nasscom’s president R Chandrashekhar’s statement that India’s IT industry could see an upturn next year as the process of investments in technology, particularly in the United States, has started to gather momentum.

Finally, the BSE Sensex gained 112.34 points or 0.33% to 33,685.56, while the CNX Nifty was up by 28.70 points or 0.28% to 10,452.50.

The BSE Sensex touched a high and a low of 33,733.71 and 33,531.94, respectively and there were 15 stocks on gaining side as against 16 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index slipped 0.07%, while Small cap index was up by 0.49%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.09%, Industrials up by 1.01%, Bankex up by 1.00%, PSU up by 0.64% and Realty was up by 0.37%, while Utilities down by 0.59%, Healthcare down by 0.56%, Telecom down by 0.48%, Power down by 0.35% and Oil & Gas was down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 3.19%, Tata Motors up by 2.78%, Tata Motors - DVR up by 2.02%, Larsen & Toubro up by 1.98% and Axis Bank up by 1.87%. On the flip side, Power Grid down by 2.05%, Sun Pharma down by 1.95%, Hero MotoCorp down by 1.23%, Coal India down by 1.21% and Lupin down by 1.10% were the top losers.

Meanwhile, in a bid to fund large infrastructure projects in India, Union Minister of Road Transport & Highways and Shipping Nitin Gadkari has said that nearly Rs 5 trillion can be raised from capital markets, most of which could in fact come from domestic investors. He noted that the government will go to the capital markets to raise funds through bonds. To help develop infra projects, he also urged banks, financial institutions and private players. He pointed out that the ministry has already undertaken massive infra projects and has set a target of Rs 25 trillion investments in highways and shipping over the next five years. He believes that this will contribute 2-3% to the country’s economic growth, will create over 1 crore jobs.

The minister has stated that they will be rolling out most of the Rs 7 trillion projects which recently announced by the government, before December 2018. He also said that this programme is the biggest infrastructure programme, including Bharatmala and expects to award nearly 25,000 km of road projects this financial year. He indicated that financial year 2012-13 saw awarding of 1,916 km, in 2013-14 it was 3,620 km, in 2014-15 it rose to 7,972 km, while in 2015-16, the quantum grew to 10,098 km. It also noted that previous fiscal, it touched 15,948 km and this year they have kept a target of 25,000 km.

Apart from building corridors at a cost of Rs 1.2 trillion, Gadkari said that lane expansion will be done at 34 places, logistics parks at 35 locations. In addition to this, he said that wayside amenities will be created at 180 sites over the next two years with each having job potential for many. Talking on the ambitious Bharatmala project, he said that under the first phase, 550 districts will be linked with the NHs. 

The CNX Nifty traded in a range of 10,461.70 and 10,403.60. There were 21 stocks in green as against 28 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were SBI up by 3.71%, ONGC up by 3.59%, Tata Motors up by 3.13%, Larsen & Toubro up by 2.89% and Indusind Bank up by 2.61%. On the flip side, Power Grid down by 2.18%, Sun Pharma down by 2.15%, BPCL down by 1.78%, Coal India down by 1.61% and GAIL India down by 1.55% were the top losers.

European markets were trading in green; France’s CAC rose 1.35 points or 0.02% to 5,511.85, UK’s FTSE 100 added 19.31 points or 0.26% to 7,574.63 and Germany’s DAX was up by 36.94 points or 0.27% to 13,477.87.

Asian equity markets ended mostly higher on Friday even as Chinese markets came under selling pressure amid anaemic growth in the nation’s service sector in October heightened worries about an economic slowdown. Underlying sentiments remained supported somewhat after the release of US tax reform bill as well as the announcement of Jerome Powell as the next Federal Reserve Chair. Investors attention shifted to the all-important US jobs report due tonight, with US employment expected to jump by 312,000 jobs in October after unexpectedly dipping by 33,000 jobs in September. The unemployment rate is expected to hold at 4.2 percent. The Japanese markets were closed for the Culture Day holiday.