Bulls back on Dalal Street; Sensex reclaims 32,900 mark

Bulls made comeback on Dalal Street on Thursday with frontline gauges garnering gains of over a percentage point, recapturing their crucial 32,900 (Sensex) and 10,150 (Nifty) bastions, as traders opted to buy beaten down but fundamentally strong stocks after two days of continuous drubbing. The markets' mood remained up-beat throughout the day and benchmarks fervently gained from strength to strength with traders taking encouragement with former Reserve Bank of India Governor YV Reddy's statement that amid uncertainties in the global economic order, a sense of optimism about the future is more in India than in other parts of the world. Meanwhile, at a meeting with Finance Minister Arun Jaitley in the run-up to the last full-year Budget of the NDA government before 2019 general elections, India Inc. has sought lower tax and more incentives for investments while exporters called for quicker GST refunds. Some support also come with International Energy Agency's (IEA) latest report stating that India is among bright spots in the global economy and is emerging as a major driving force in global energy trends, with all modern fuels and technologies playing a part.

Markets extended rally in second half of trade to end near intraday highs on report that the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) surged to Rs 1.31 lakh crore at the end of October, after hitting an over eight- year low in the month of September. Total value of P-note investments in Indian markets including equity, debt and derivatives, at October-end climbed to Rs 131,006 crore, from Rs 122,684 crore at the end of September. Separately, a foreign brokerage report enlightened that the country’s economic growth is expected to continue with a shallow recovery next year, and is likely to inch up to 7.2% in 2018-19 from an estimated 6.5% in the current fiscal. The report added that economic recovery will continue to be driven by consumption, supported by a pre-poll step up in public spend rather than investment, given the persistence of surplus capacity and tight 3.2% of GDP fiscal deficit target.

Firm opening in European counters too aided sentiments, as investors digested merger and acquisition news and awaited further details on progress towards US tax reform. On the economic front, the French current account deficit narrowed to 2.2 billion euros in October from 3.3 billion euros in September. However, Asian markets ended mostly in red, as the dollar inched up against the yen and oil eked out small gains.

Back home, all eyes will now be on the forthcoming elections in Gujarat where various opinion polls suggest the ruling BJP and the Opposition party Congress are in a neck-to-neck race. The outcome may have implications on the government policies ahead. Shares of rice producers like LT Foods, Kohinoor Foods and Chaman Lal Setia Exports rallied on back of heavy volumes on report that exports of rice rose by over 30% in dollar terms and 25% in rupee terms during April-September as European buyers built inventories in anticipation of tighter quality tests effective November 1.

Finally, the BSE Sensex soared 352.03 points or 1.08% to 32,949.21, while the CNX Nifty was up by 122.60 points or 1.22% to 10,166.70.

The BSE Sensex touched a high and a low of 32,992.45 and 32,598.12, 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 1.38%, while Small cap index was up by 1.29%.

The top gaining sectoral indices on the BSE were Telecom up by 4.81%, Utilities up by 2.92%, Consumer Durables up by 2.49%, Power up by 2.13% and Capital Goods was up by 2.10%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Bharti Airtel up by 6.08%, Asian Paints up by 3.29%, Maruti Suzuki up by 3.26%, Tata Steel up by 2.97% and Bajaj Auto up by 2.78%. On the flip side, Coal India down by 0.64%, TCS down by 0.52%, Cipla down by 0.50%, Wipro down by 0.34% and Sun Pharma down by 0.26% were the top losers.

Meanwhile, expressing disappointment over the Reserve Bank of India's (RBI) decision to leave key policy rates unchanged, India Inc has said there is a need to revive domestic demand and encourage investment through lower cost of capital to crank up growth. Besides, Confederation of Indian Industry (CII) Director General Chandrajit Banerjee has expressed hopes that going forward the central bank would shift its policy stance to accommodative from neutral and effect a cut in interest rates to revive domestic demand, which would provide a boost to broad-based investment activity that has yet to take off in a big way.

Banerjee also observed that a reduction in interest rates would give the necessary signal that fiscal and monetary policies are working in tandem to give a boost to growth. Assocham President Sandeep Jajodia pointed out that while inflation weighed on the decision of the Monetary Policy Committee of the RBI, the growth concerns cannot be brushed aside either, as the cost of capital is still high in India. He also noted that India Inc continues to remain over-leveraged while consumer demand is still subdued.

RBI Governor Urjit Patel along with six-member Monetary Policy Committee (MPC) maintained status quo for the second time in a row during fifth-bi-monthly monetary policy of FY18. Policy repo rate under the liquidity adjustment facility (LAF) continues to stand at 6%, while reverse repo rate under the LAF remains at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25%. However, RBI has raised the inflation forecast for the next two quarters from 4.2-4.6% to 4.3-4.7% on rising crude oil and vegetable prices.

The CNX Nifty traded in a range of 10,182.65 and 10,061.90. There were 43 stocks in green as against 7 stocks in red on the index.

The top gainers on Nifty were GAIL India up by 8.57%, Bharti Airtel up by 6.94%, Tech Mahindra up by 5.13%, UPL up by 4.97% and Asian Paints up by 3.50%. On the flip side, Coal India down by 0.70%, TCS down by 0.58%, Wipro down by 0.57%, Cipla down by 0.41% and Dr. Reddy’s down by 0.19% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 9.27 points or 0.13% to 7,357.30, France’s CAC gained 18.71 points or 0.35% to 5,393.06 and Germany’s DAX was up by 80.6 points or 0.62% to 13,079.45.

Asian equity markets ended mixed on Thursday as the dollar inched up against the yen and oil eked out small gains after falling as much as 3 percent overnight on data showing a larger-than-expected increase in US gasoline stocks. Japanese shares ended higher on bargain hunting as Moody's Investors Service retained the sovereign ratings of the country with 'stable' outlook and the yen weakened against the dollar, bolstered by reports that the US Congress is on track to approve legislation that would avert a partial government shutdown over the weekend. Meanwhile, Chinese stocks ended lower due to year-end profit booking by investors.