Bulls make strong comeback on D-Street

Bulls took the momentum back from bears on Monday as key equity benchmarks ended the day on a strong note, on the back of value buying by traders. The start of the day was little cautious, as Union Minister Dharmendra Pradhan said crude prices are not under the control of the Indian government and are determined by international forces. Domestic sentiments were affected in early morning deals also due to a private report stating that India’s foreign-exchange reserves are shrinking fast and may soon reach a level that could hamper the central bank’s ability to defend the rupee. Separately, Reserve Bank of India’s (RBI) data showed that the country’s foreign exchange reserves declined by $942 million to $393.523 billion in the week to October 19 on account of a fall in foreign currency assets. The market participants took note of Finance Minister Arun Jaitley’s statement that as an economy evolves, regulation needs to be relaxed or altered keeping in the mind the ground situation. However, the markets soon gained traction to rally in northward direction, supported by Suresh Prabhu’s statement that India’s export surged to a six-year high of 9.8% in the financial year 2017-18.

In the last hours of the trading, key indices extended their gains to settle near their intraday high points, tracking firm European markets. The street cheered the RBI’s statement that it will inject Rs 400 billion into the system in November through a purchase of government securities as it looks to meet festive season demand for funds. Adding some optimism, Prime Minister Narendra Modi said that India is going through a massive transformative phase and international agencies say the country will drive the growth of the global economy in the coming decade as he invited the Indian community in Japan to contribute actively in building a new India. Some support also came with a private report stating that the global economy is expected to achieve an annual GDP growth rate, as measured in constant dollars, of 3.7% between 2018-2020 before dipping to 3.6% between 2021-2023 and, in turn, pass the $100 trillion mark around 2022. Sentiments also got some comfort as the government is expecting that bad loan recoveries are likely to surpass Rs 1.80 lakh crore target for the current financial year (FY19), through the new Insolvency and Bankruptcy Code (IBC) and other means.

On the global front, European markets were trading in green, as French consumer confidence improved in October. The survey data from the statistical office Insee showed that the consumer sentiment index rose to 95 in October from 94 in September. The score came in line with expectations. The street also got relief after Germany's consumer confidence is set to remain stable in November, despite Brexit and trade disputes weighing on economic and income expectations. As per survey data from the market research group GfK, the forward-looking consumer sentiment index came in at 10.6 in November, the same as seen in October. The score was forecast to drop to 10.5. However, Asian markets ended mixed, as sentiments remained fragile amid heightened worries about a slowdown in global economic growth and corporate earnings.

Back home, metals stocks ended higher aided by the World Steel Association’ (worldsteel) report showing that India’s crude steel production rose 2.1% to reach 8.520 million tonnes (MT) in September 2018. The country had produced 8.345 MT steel during the same month last year. Pharma stocks also ended in green terrain with taking support from ratings agency Crisil’s statement that after two consecutive years of single-digit expansion, big Indian drug firms are expected to return to double-digit growth in the current fiscal aided by recovery in US sales, weakening of the rupee and revival of domestic demand. Besides, banking sector stocks edged higher with the RBI’s data showing that Bank credit increased by 14.35% to Rs 89.93 lakh crore in the fortnight ended October 12, while the deposits rose by 8.86% to Rs 117.85 lakh crore. Further, sugar sector stocks remained in sweet spot on report that over 400 sugar producers and intermediaries are congregating on October 29, to evolve strategies to boost India’s sweetener exports in the current crushing season which began in October.

Finally, the BSE Sensex gained 718.09 points or 2.15% to 34,067.40, while the CNX Nifty was up by 220.85 points or 2.20% to 10,250.85.

The BSE Sensex touched a high and a low of 34,154.60 and 33,341.80, respectively and there were 24 stocks advancing against 7 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index surged 2.80%, while Small cap index was up by 2.06%.

The top gaining sectoral indices on the BSE were Healthcare up by 4.21%, Realty up by 3.77%, Capital Goods up by 3.66%, PSU up by 3.57% and Energy up by 3.33%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were ICICI Bank up by 10.82%, SBI up by 8.04%, Adani Ports & SEZ up by 7.33%, Larsen & Toubro up by 5.25% and Tata Motors - DVR up by 5.04%. On the flip side, Indusind Bank down by 2.36%, HDFC Bank down by 1.95%, Kotak Mahindra Bank down by 1.85%, Bharti Airtel down by 1.56% and Hindustan Unilever down by 0.54% were the top losers.

Meanwhile, the Prime Minister's Economic Advisory Council (PMEAC) Chairman Bibek Debroy has said that the four-rate slab structure of the Goods and Services Tax (GST) regime is likely to be reduced to three as the process of rationalising India's new indirect tax regime proceeds further.

The PMEAC Chairman indicated that only very few countries including India, Canada and perhaps Australia have implemented GST follow the principle of dual GST whose terminal role from an economists point of view is to have a single tax structure. Noting that a multiple tax structure makes GST implementation an extremely difficult process, he said the consensus on this overhaul of India's indirect tax regime was that the reform, although not perfect, should be rolled out and it (GST) could be tweaked as we go along. Besides, he pointed out that countries had taken as long as 10 years for their GST systems to stabilise.

The GST, which replaced 17 central and state levies including factory-gate, excise duty, service tax and local sales tax or VAT, is India's biggest tax reform in 70 years of independence and will help modernise Asia's third largest economy. 

The CNX Nifty traded in a range of 10,275.30 and 10,020.35. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 12.49%, ICICI Bank up by 11.34%, SBI up by 7.82%, Adani Ports & SEZ up by 7.19% and Dr. Reddy’s up by 5.29%. On the flip side, Indusind Bank down by 2.48%, Eicher Motors down by 1.77%, Kotak Mahindra Bank down by 1.61%, HDFC Bank down by 1.60% and Bharti Airtel down by 1.44% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 92.13 points or 1.31% to 7,031.69, France’s CAC added 13.08 points or 0.26% to 4,980.45 and Germany’s DAX was up 146.99 points or 1.3% to 11,347.61.

Asian markets ended mixed on Monday, with Chinese stocks leading the declines and settled with a cut of over tow percent, amid worries about U.S.-China trade relations and the health of the tech sector on Wall Street. Moreover, Chinese data over the weekend underscored worries of a cooling economy as profit growth at its industrial firms slowed for the fifth consecutive month in September as sales of raw materials and manufactured goods ebbed. Japanese shares too closed lower amid recent heavy falls in both US and Chinese stock markets. On the economic front, Japan’s retail sales dropped for the first time in four months in September, a government report showed. Retail sales fell 0.2 percent month-on-month, in line with expectations but reversed a 0.9 percent rise in August.