Bulls roar on Dalal Street; Nifty ends just shy of 11,700 mark

Bulls went brisk on Dalal Street on Monday, with frontline gauges logging new record highs for yet another day, ending just shy of their crucial 11,700 (Nifty) and 38,700 (Sensex) levels. After a gap-up opening, there appeared not even an iota of profit booking in the session with benchmarks fervently gaining from strength to strength to end near intraday highs, as investors continued hunt for fundamentally strong stocks. Markets started the session on an optimistic note with report that former Niti Aayog vice-chairman Arvind Panagariya opined that rupee depreciation was long overdue, saying appreciated currency had hurt the country’s exports. He further said India’s macroeconomic management is sound and there was no reason to worry. Besides, the government is looking to complete nearly three-fourths of its disinvestment target by the end of December and has a pipeline of about 15 companies in which it will sell stakes to achieve this interim goal. Investors took encouragement with private report that India’s twin deficit and inflation are at a 'far more comfortable position' than in 2013.

Markets extended gains after Finance Minister Arun Jaitley said that a series of reforms taken by the government transformed the weak economy. He also said that the reform measures has substantially cleaned up the system and made it more transparent, noting that decisiveness has led to easier decision-making and made the economy stand out before several other countries. Besides recent fall in oil prices and strong foreign portfolio investors’ (FPI) inflows will also support the domestic currency. Foreign investors have pumped in a little over Rs 6,700 crore into the Indian capital markets so far this month on improvement on the macro front, better corporate earnings and correction in the mid and small-cap space. Some support came in with a report stating that India and Singapore have signed the Second Protocol amending the Comprehensive Economic Cooperation Agreement (CECA) in order to boost bilateral trade. Besides, a private report highlighted that the Centre has lined up plans to raise a massive Rs 1.7 lakh crore via the extra-budgetary resources (EBR) route in the current fiscal, up 110% from FY18.

Global cues too remained supportive with European markets trading in green in early deals, as a measure of German business confidence rose more-than-expected to 103.8 in August from 101.7 in July. The survey data from Ifo Institute showed that the current conditions index climbed to 106.4 compared to the forecast of 105.3. Asian markets ended in green, as Powell's comments gave markets a breather from simmering trade tensions.

Back home, shares of public sector banks (PSBs) remained on buyers’ radar ahead of the Allahabad Court verdict on stressed power assets as the Reserve Bank of India (RBI) deadline ends today. The RBI’s February 12 circular said all stressed assets will either get resolved by August 27 or get taken to the NCLT. However, real estate related stocks ended lower with ICRA’s report that the adoption of new accounting standard IndAS has dented the net-worth of nine major listed real estate firms by 18% and revenues by 23.6% sequentially in June quarter. Stocks related to Textile counter ended lower despite India’s textiles and clothing exports have surged 11% in July 2018 in comparison to same period of last year, on account of favourable government policies and rupee depreciation.

Finally, the BSE Sensex surged 442.31 points or 1.16% to 38,694.11, while the CNX Nifty was up by 134.85 points or 1.17% to 11,691.95.

The BSE Sensex touched a high and a low of 38,736.88 and 38,416.73, respectively and there were 30 stocks advancing against 1 stock declining on the index.

The broader indices ended in green; the BSE Mid cap index soared 1.07%, while Small cap index was up by 0.70%.

The top gaining sectoral indices on the BSE were Utilities up by 2.44%, Power up by 2.37%, PSU up by 1.69%, Bankex up by 1.69% and IT was up by 1.54%, while Realty down by 0.16% was the lone losing index on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.93%, Power Grid Corporation up by 3.64%, ICICI Bank up by 2.97%, SBI up by 2.65% and Infosys up by 2.53%. On the flip side, Sun Pharma down by 1.25% was the lone loser.

Meanwhile, Citing International Monetary Fund (IMF) reports to highlight economic progress of India, Finance Minister Arun Jaitley has said that a series of reforms taken by the government transformed the weak economy. He also said that the reform measures has substantially cleaned up the system and made it more transparent, noting that decisiveness has led to easier dec ision-making and made the economy stand out before several other countries.

Jaitley made a comparison of the IMF’s 2014 report with latest 2018 report and pointed that the report of 2014 talks about weak economy during the UPA government and the latest points at near-term macroeconomic outlook broadly favorable and growth forecast rising to 7.3% in FY 2018-19. Underlining the differences, he also said that in 2014, there was high fiscal and current account deficits as well as a standstill in infrastructure, power and in the allocation of natural resources.

The minister further took leaf out of 2018 report and emphasized that stability-oriented macroeconomic policies and progress on structural reforms continue to bear fruit. He also said that even though growth slowed to 6.7% in FY2017/18 post Note Ban and the goods and service tax (GST) rollout, the growth is recovering on account of an investment pickup. Jaitley also underlined the lower inflation figures of FY2017/18.

The CNX Nifty traded in a range of 11,700.95 and 11,595.60. There were 47 stocks in green as against 3 stocks in red on the index.

The top gainers on Nifty were Hindalco up by 3.65%, Bharti Airtel up by 3.51%, Power Grid Corporation up by 3.35%, Tech Mahindra up by 3.21% and ICICI Bank up by 2.92%. On the flip side, Sun Pharma down by 1.32%, Bajaj Finserv down by 0.29% and Dr. Reddy’s Lab down by 0.10% were the few losers.

European markets were trading in green; France’s CAC surged 25.80 points or 0.47% to 5,458.30 and Germany’s DAX was up by 73.90 points or 0.59% to 12,468.42.

Asian equity markets ended higher on Monday after Fed Chair Jerome Powell expressed confidence over the US economy and justified gradual interest rate hikes. At the Jackson Hole Symposium in Wyoming, Powell said that as the most recent FOMC statement indicates, if the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate. Japanese shares ended at a 10-week high, with a relatively cheaper yen and record highs on Wall Street Friday supporting underlying sentiments. Further, Chinese shares ended at two-week highs, lifted by a stronger yuan after a tweak in the central bank’s management of the currency boosted airline stocks and other firms with heavy dollar exposure.