Indian bourses extend gains; Sensex surpasses 34,500 level

Indian equity markets extended their gains in the early noon session with Nifty and Sensex recapturing 10,350 and 34,500 levels. Indices erased early losses helped by the rally in heavy weight stocks such as Yes Bank and RIL. Buying in Energy, Oil & Gas and Bankex stocks also helped markets to move upwards. Besides, investors got some support with Finance Minister Arun Jaitley stating that there are some more steps on the anvil to narrow the current account deficit (CAD) and bolster foreign exchange inflows. Some optimism also came in with Subhash Chandra Garg stating that the rupee is expected to revert to a more reasonable value soon and the government is ready with measures if required. Adding to the optimism, private report highlighted that Prime Minister Narendra Modi has said investment environment is best in India amid changes happening all around.

On the global front, Asia counters were trading mostly in red as China’s markets stumbled despite its central bank moving to pump more liquidity into the broader economy, as worries grow of a sharp knock to growth from an escalating trade dispute with the United States. Back home, in scrip specific developments, L&T gained with construction arm bagging orders worth Rs 1,881 crore and Thomas Cook soared on getting nod to acquire 24% stake in TravelJunkie Solutions.

The BSE Sensex is currently trading at 34506.47, up by 129.48 points or 0.38% after trading in a range of 34031.98 and 34636.43. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.63%, while Small cap index was down by 0.53%.

The top gaining sectoral indices on the BSE were Energy up by 3.66%, Oil & Gas up by 2.29%, Bankex up by 0.92%, PSU up by 0.88% and Auto was up by 0.65%, while Realty down by 1.74%, IT down by 1.21%, TECK down by 1.14%, Telecom down by 1.05% and Basic Materials was down by 0.72% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 4.61%, Reliance Industries up by 4.59%, Hero MotoCorp up by 3.07%, Coal India up by 3.02% and Kotak Mahindra Bank up by 2.51%. On the flip side, Vedanta down by 3.86%, Wipro down by 2.64%, TCS down by 1.96%, HDFC down by 1.77% and Bharti Airtel down by 1.03% were the top losers.

Meanwhile, global rating agency, Fitch ratings in its latest report has said that the government directive to state-owned oil retailing firms to subsidise petrol and diesel would hit their profitability and credit metrics. It noted that the government reduced petrol and diesel prices by Rs 2.5 a litre, in response to rapid increases since the start of the year.

According to the report, excise duty on these fuels has been cut by Rs 1.50, but the state oil marketing companies (OMCs) have been directed to bear the cost of the additional Re 1 per litre. It also pointed out that fuel prices will continue to be adjusted daily depending on future market moves, but the margins earned by OMCs have effectively been narrowed, which amounts to an implicit subsidy for consumers. Adding further, it said that the fuel-price reduction also highlights the regulatory risks for Indian OMCs as a result of rising crude oil prices and the depreciating rupee. It added that the elections due in 2019 further increase the risk of price controls if crude oil prices continue to rise or the rupee weakens further.

The rating agency believes that any further reversal of these fuel-price reforms will be negative for the OMCs' financial profiles and could affect the investment climate in the sector. It informed that the government has also requested the state governments to cut local taxes to further reduce fuel prices. It added that rising crude prices and the depreciating currency are also increasing the working capital requirements of OMCs, driving up debt levels.

The CNX Nifty is currently trading at 10371.35, up by 54.90 points or 0.53% after trading in a range of 10201.95 and 10398.35. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were HPCL up by 6.39%, Reliance Industries up by 5.34%, Indian Oil up by 5.29%, Yes Bank up by 5.12% and Indiabulls Housing up by 3.90%. On the flip side, Vedanta down by 3.52%, Hindalco down by 3.17%, Wipro down by 2.92%, HCL Tech down by 1.76% and TCS down by 1.75% were the top losers.

Asia counters were trading mostly in red; Straits Times decreased 15.56 points or 0.49% to 3,194.23, Hang Seng declined 191.06 points or 0.72% to 26,381.51, Shanghai Composite fell 82.77 points or 3.02% to 2,738.58, KOSPI decreased 6.45 points or 0.29% to 2,261.07 and Taiwan Weighted was down 61.19 points or 0.59% to 10,455.93.

On the flip side, Jakarta Composite was up 22.19 points or 0.39% to 5,754.13.