Bulls take charge of Indian stock markets; Sensex surges 400 ponits

Major benchmarks fervently gained from strength to strength in the early noon session, with Nifty and Sensex posting gains of 130 and 400 points respectively, following gains in consumer durables, capital goods and industrials stocks. Recovery of rupee from its lifetime low against the American currency and buying by domestic institutional investors also supported the indices. Sentiments remained upbeat with report highlighting that the Reserve Bank of India (RBI) will inject Rs 12,000 crore liquidity into the system through purchase of government bonds on October 11 to meet the festival season demand for funds. Investors continued to take some encouragement with a report stating that India is all set to emerge as the 11th wealthiest country in the world as its personal financial wealth is projected to grow by 13% to $5 trillion by 2022 from the current $3 trillion. Meanwhile, another private report said that the US government's development finance institution OPIC is keen to invest in the development of India's infrastructure, port and solar energy sector. Traders paid no heed to a private report stating that India's retail inflation likely sped up in September on higher food and fuel costs, pushed up by a battered rupee and suggesting further policy tightening from the Reserve Bank of India.

On the global front, Asian markets were trading mixed. Japanese shares were trading higher after four days of losses -- with purchases making up for the higher yen's dampening impact -- before dropping back into negative territory in mid-morning trade.  The markets in Taiwan are closed for the National Day holiday.

Back home, sugar related stocks remained in focus with Nitin Gadkari stating that sugar mills will now make ethanol directly from sugarcane to serve as safe fuel and this, in turn, will strengthen the economy of the country. Power sector was trading in green with Crisil Ratings in its latest report stating that a 40-60% haircut coupled with a few financial safeguards may help in resolving as much as Rs 1 trillion of debt stuck in coal-based power projects and enhance their viability on a sustained basis. In scrip specific developments, GMR Infrastructure advanced on the buzz of its arm signing MoU with APGDC and Maruti Suzuki strengthened on selling over 24,000 units of Ciaz during H1FY19.

The BSE Sensex is currently trading at 34699.68, up by 400.21 points or 1.17% after trading in a range of 34346.50 and 34731.37. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 3.28%, while Small cap index was up by 2.71%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 3.64%, Capital Goods up by 2.89%, Industrials up by 2.74%, Consumer Disc up by 2.61% and Realty up by 2.53%, while IT down by 0.42% and TECK down by 0.16% were the only losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 4.23%, Vedanta up by 3.30%, Axis Bank up by 2.98%, SBI up by 2.89% and Bajaj Auto up by 2.77%. On the flip side, Wipro down by 1.45%, Infosys down by 1.41%, Sun Pharma down by 0.88%, Mahindra & Mahindra down by 0.52% and Hindustan Unilever down by 0.15% were the top losers.

Meanwhile, Credit ratings agency, Crisil Ratings in its latest report has said that a 40-60% haircut coupled with a few financial safeguards may help in resolving as much as Rs 1 trillion of debt stuck in coal-based power projects and enhance their viability on a sustained basis. It noted that the haircuts are also supported by financial safeguards such as elongated repayment structure, lower interest rate, comfortable liquidity through debt service reserve accounts (DSRA), and adequate working capital limits for coal requirements.

According to the report, for some capacities, takeover by a financially strong and more-experienced management can ensure quicker turnaround. It also pointed out that lower debt and the consequent reduction in the cost of electricity generation will make these capacities attractive to new power purchase agreements (PPAs). It also stated that thermal coal-based power capacities have been in stress for multiple reasons, including over-leverage due to costs over-runs, inadequate PPA and fuel supply agreements, and aggressive bids.

While structural issues such as PPAs and fuel supply agreements may continue, the ratings feels debt haircuts can potentially improve cost of generation for these plants. It also said that lower cost of generation will also enhance the competitiveness of these capacities, making them amenable to new PPAs, provided fuel supply remains adequate. It added that with power demand expected to grow at a healthy pace of around 6 percent over the next four years (5.5 percent in financial year 2018), these capacities could benefit from potential new PPAs.

The CNX Nifty is currently trading at 10431.60, up by 130.55 points or 1.27% after trading in a range of 10318.25 and 10445.20. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 8.12%, Bajaj Finserv up by 6.59%, Titan Co up by 5.60%, Maruti Suzuki up by 4.19% and Eicher Motors up by 3.95%. On the flip side, Wipro down by 2.02%, Infosys down by 1.64%, HCL Tech down by 1.56%, Sun Pharma down by 0.93% and Mahindra & Mahindra down by 0.74% were the top losers.

Asian markets were trading mixed; Hang Seng increased 159.88 points or 0.61% to 26,332.79, Jakarta Composite surged 7.80 points or 0.13% to 5,804.59 and Nikkei 225 was up 36.65 points or 0.16% to 23,506.04.

On the flip side, Shanghai Composite decreased 2.37 points or 0.09% to 2,718.64, Straits Times declined 24.95 points or 0.79% to 3,141.65 and KOSPI was down 24.13 points or 1.08% to 2,229.70.