Bulls tighten grip on Dalal Street; markets end at fresh closing highs

Bulls tightened grip on Dalal Street on Tuesday with Sensex and Nifty hitting fresh closing high and settling above their crucial 38,800 and 11,700 levels, respectively. After a decent opening, benchmarks traded firmly and fervently gained 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 Economic policy think-tank, the National Council of Applied Economic Research (NCAER) in its latest report retaining India’s growth forecast for the current fiscal at 7.4%, citing comfortable agricultural sector outlook and a marked improvement in the external sector. Adding to the optimism Commerce Minister Suresh Prabhu said that the government is working on a comprehensive strategy in a bid to double India’s export by the year 2025. He also said that the meeting of different exports’ stakeholders discussed a strategy for revitalizing India’s exports.

Markets added gains in last leg of trade to end near all-time closing highs, as some support came with the Department of Industrial Policy and Promotion’s (DIPP) latest data showing that foreign direct investment (FDI) in India grew by 23% to $12.75 billion during the April-June quarter of 2018-19, as compared to foreign fund inflows of $10.4 billion in April-June 2017-18. Traders also took encouragement with finance minister Arun Jaitley’s statement the government is looking at achieving economic growth higher than predicted by many in the current financial year and India could become the fifth largest economy (surpassing the UK) next year. Traders shrugged off State Bank of India’s (SBI) research report Ecowrap that India’s current account deficit (CAD) is likely to touch 2.8% of the Gross Domestic Product (GDP) in the current fiscal (FY19) on account of surge in crude oil prices and moderate growth in exports. It also said that even merchandise trade imbalance is expected to increase to Rs 188 billion in FY19 as against Rs 160 billion in FY18.

Firm opening in European counters too aided sentiments after the US-Mexico trade deal to replace NAFTA helped ease further escalation of global trade tensions. The sentiments were positive despite France’s government reduced its growth projection for next year and the 2019 budget will be based on the new forecast. The government forecast the economy to expand 1.7% in 2019 instead of 1.9% projected earlier. Asian markets ended mostly in green.

Back home, shares of power and power finance companies edged lower in an otherwise strong market after the Allahabad High Court refuses interim relief to power firms from Reserve Bank of India (RBI) directions. The RBI circular directed lenders to undertake insolvency resolution of defaulting companies within a strict timeline. The central bank had ordered banks to identify stress even when repayments were overdue by only a day. Banking stocks lost sheen, as Finance minister Arun Jaitley cautioned banks against growing credit at a high rate of 28-31%, warning that this would amount to indiscriminate lending and sow seeds for future bad loans. However, shares of fertilizers companies rallied on the BSE on the back of heavy volumes after the media report suggested that the companies will be paid subsidies every week instead of waiting for months. Select textile stocks ended higher on quick estimates by DGCI&S showing that the worst seems to be over for the textile exports, as it increased 11% year-on-year (y-o-y) to Rs 19,636 crore in July.

Finally, the BSE Sensex surged 202.52 points or 0.52% to 38,896.63, while the CNX Nifty was up by 46.55 points or 0.40% to 11,738.50.

The BSE Sensex touched a high and a low of 38,938.91 and 38,760.58, respectively and there were 17 stocks advancing against 14 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index shed 0.35%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Metal up by 1.89%, Energy up by 1.16%, Basic Materials up by 0.71%, Auto up by 0.57% and Power was up by 0.44%, while PSU down by 1.13%, Consumer Durables down by 0.82%, Oil & Gas down by 0.73%, Realty down by 0.72% and Utilities was down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 2.20%, Vedanta up by 2.20%, Reliance Industries up by 2.06%, Maruti Suzuki up by 1.72% and Axis Bank up by 1.62%. On the flip side, Yes Bank down by 3.07%, SBI down by 1.07%, Hindustan Unilever down by 1.04%, ONGC down by 0.94% and Tata Motors - DVR down by 0.89% were the top losers.

Meanwhile, with an aim to protect the domestic players and to discourage cheap imports, the government may impose anti-dumping duty on imports of High Speed Steel of Non Cobalt Grade from Brazil, China and Germany, as the investigation is already in the process on this product.

The Directorate General of Trade Remedies (DGTR) which ensures a level playing field to the Domestic Industry against the adverse impact of the unfair trade practices, has initiated an investigation into the alleged dumping of this product to determine the existence, degree and effect of alleged dumping and to recommend the amount of antidumping duty, which if levied, would be adequate to remove the injury to the domestic industry.

Graphite India had filed an application before the DGTR for imposition of anti-dumping duty on imports of the product from Brazil, China and Germany. The period of investigation (POI) for the purpose of present investigation covers 2017-18. However, for the purpose of injury investigation, the period will also cover the data of 2014-17.

The CNX Nifty traded in a range of 11,760.20 and 11,710.50. There were 21 stocks in green as against 29 stocks in red on the index.

The top gainers on Nifty were Hindalco up by 4.17%, Reliance Industries up by 2.40%, Adani Ports & SEZ up by 2.34%, Vedanta up by 2.15% and Maruti Suzuki up by 1.75%. On the flip side, GAIL India down by 4.83%, Yes Bank down by 3.24%, HPCL down by 1.89%, Cipla down by 1.76% and Dr Reddy’s down by 1.31% were the top losers.

European markets were trading in green; France’s CAC rose 14.49 points or 0.26% to 5,493.59, Germany’s DAX added 22.01 points or 0.18% to 12,560.32 and UK’s FTSE 100 was up by 25.50 points or 0.34% to 7,602.99.

Asian equity markets ended mostly higher on Tuesday amid receding trade worries after the United States and Mexico agreed to overhaul the North American Free Trade Agreement (NAFTA). US President Donald Trump also indicated the US would soon begin negotiations with Canada, but suggested that any agreement could be a separate deal. Investors expect Canada too would agree to the new terms to preserve a three-nation pact. Japanese shares ended marginally higher as the US-Mexico trade deal helped lift automobile companies. Though, Chinese stocks ended slightly lower, as investors paused for breath after strong gains the previous session.