Benchmarks end higher on Thursday; Nifty reclaims 10,500 mark

Indian equity benchmarks ended the session in green terrain on Thursday with frontline gauges recapturing their crucial 34,600 (Sensex) and 10,500 (Nifty) levels. Markets traded with traction throughout the session as sentiments remained up-beat with report stating that India’s direct tax collections for the last financial year crossed the Rs 10 lakh crore mark, registering an increase of 18% over the previous fiscal. Key gauges started the session on an optimistic note, as traders took some encouragement with report stating that India has moved one notch higher, to the 44th place in terms of competitiveness, in the annual rankings compiled by International Institute for Management Development (IMD) which placed the US in the top slot. The US became the most competitive economy globally driven by its strength in economic performance and infrastructure, followed by Hong Kong and Singapore in the second and third place, respectively. Some optimism came with union minister Ravi Shankar Prasad’s statement that the government is working on a long-term solution to fuel prices. Meanwhile, the government has cleared amendments to the Insolvency and Bankruptcy Code (IBC), incorporating changes suggested by a government-appointed panel.

Markets extended gains in last leg of trade with Oil Minister Dharmendra Pradhan’s statement that India is trying to get a resolution soon on tackling rising fuel prices, and the government is looking at both short-term and long-term solutions. Meanwhile, engineering exporters’ body, EEPC India said that India can make its export promotion schemes WTO- compliant and make the country’s exports competitive by allowing the exchange rate to reflect the real value of the rupee , that has only recently shown some parity, helping the exporting community. However, traders shrugged off Union Minister Nitin Gadkari’s statement that any cut in petrol, diesel prices will take money away from the government’s social welfare schemes. He added that the increase in oil prices is an unavoidable, economic situation, as India is now linked to the global economy.

Positive opening in European counters too aided sentiments. The European markets were trading mostly in green in early deals on Thursday, as investors monitored a bounce across financials and tech stocks. Asian markets exhibited mixed trend as growing trade concerns overshadowed dovish minutes of the US Federal Reserve’s latest monetary policy meeting.

Back home, banking stocks ended higher, supported by Reserve Bank of India’s (RBI) latest data report that banks’ credit grew by 12.64% year-on-year to Rs 85,51,099 crore in the fortnight ended May 11, 2018. In the similar fortnight ended May 12, 2017, banks’ advances stood at Rs 75,90,941 crore. IT index up nearly two and a half percent as TCS, Infosys and HCL Technologies gained after rupee weakened against the US dollar, which helped in lifting the markets higher. However, select oil exploration related stocks such as ONGC ended lower as government to consider levy of tax on oil producers to control the prices of petrol and diesel. Most auto stocks including Tata Motors, TVS Motor and Maruti Suzuki remained under pressure, as the US President Donald Trump ordered probe into whether import of automobiles and auto parts threaten national security.

Finally, the BSE Sensex rose 318.20 points or 0.93% to 34,663.11, while the CNX Nifty was up by 83.50 points or 0.80% to 10,513.85.

The BSE Sensex touched a high and a low of 34,741.46 and 34,367.83, respectively and there were 24 stocks on gaining side as against 7 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.24%, while Small cap index was down by 0.14%.

The top gaining sectoral indices on the BSE were IT up by 2.45%, TECK up by 2.37%, Telecom up by 2.23%, Bankex up by 1.41% and Metal was up by 1.00%, while Oil & Gas down by 1.72%, Auto down by 1.56%, Utilities down by 1.03%, Industrials down by 0.72%, Realty was down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.11%, Infosys up by 3.09%, TCS up by 3.08%, Axis Bank up by 2.65% and Sun Pharma up by 2.23%. On the flip side, Tata Motors down by 6.56%, ONGC down by 4.50%, Tata Motors - DVR down by 4.40%, Bajaj Auto down by 1.41% and Maruti Suzuki down by 1.07% were the top losers.

Meanwhile, the Cabinet headed by Prime Minister Narendra Modi has approved promulgation of an ordinance to amend the 16-month-old Insolvency and Bankruptcy Code (IBC). The ordinance proposes to classify home buyers as financial creditors at par with lenders to help them quickly get refunds from defaulting companies. The amendment comes months after a new Section 29A was added into the bankruptcy code in November, introducing four layers of ineligibility for potential bidders.

The Minister for Law and Justice Ravi Shankar Prasad said ‘it's a new legislation, the Cabinet has approved it’. However, he refused to divulge further details citing constitutional provisions. On if the Cabinet has cleared some relief measures for home buyers as per the recommendations of the panel, he said, ‘An Ordinance, till it is approved by the President, I cannot speak about the details’.

The present amendment is based on recommendations of a 14-member Insolvency Law Committee that had earlier suggested a slew of measures, including addressing woes of home buyers and making recoveries easier for lenders. The panel had suggested to the Ministry of Corporate Affairs that home buyers should be treated as financial creditors, which will allow them to equitably participate in an insolvency resolution process. It had also suggested relaxations for micro, small and medium enterprises (MSMEs) under the IBC by allowing promoters to bid.

The CNX Nifty traded in a range of 10,535.15 and 10,419.80. There were 34 stocks in green as against 16 stocks in red on the index.

The top gainers on Nifty were Bharti Airtel up by 4.34%, TCS up by 3.31%, Infosys up by 2.96%, Axis Bank up by 2.92% and Sun Pharma up by 2.53%. On the flip side, Tata Motors down by 6.33%, GAIL India down by 5.45%, ONGC down by 4.39%, Grasim Industries down by 2.52% and HPCL down by 1.10% were the top losers.

The European markets were trading mostly in green; Germany’s DAX gained 8.73 points or 0.07% to 12,985.57 and France’s CAC was up by 24.39 points or 0.44% to 5,590.24, while UK’s FTSE 100 was down by 6.77 points or 0.09% to 7,781.67.

Asian equity markets ended mixed on Thursday amid renewed trade tensions after US President Donald Trump said that the current structure used in trade talks with China was ‘too hard to get done’. Investor optimism over dovish Fed minutes was tempered by news reports that the US is considering imposing new duties on automobile imports. Japanese shares fell, led down by automakers on worries about new tariffs after the US launched a national security probe into car and truck imports. Further, China stocks extended losses, after falling the most in a month in the previous session, as caution prevailed amid renewed concerns over China-US trade tensions.