Markets make strong gains; Sensex reclaims 34,400 mark

Indian equity indices made strong gains on Wednesday, with Sensex and Nifty ending the trading session near their intraday high points, tracking positive cues from global markets. After a cautious start, the markets traded under pressure during early deals, amid the Reserve Bank of India’s (RBI) report showing that India Inc’s foreign borrowing more than halved to $1.71 billion in September. The borrowings were $3.48 billion in September last year. Traders’ sentiments got impacted by a report stating that Indian stocks are over-valued and that earnings growth could slow in the wake of macro headwinds, foreign funds have been taking risk off the table. The chances of capital losses in the bond markets, as yields rise, has seen money move out of the debt market too. Some concerns also came with a private report stating that India, which presently has a rich demographic dividend, will need 9.94 crore additional jobs over the decade. It highlighted warning that lack of concrete efforts could push India into jobless growth. Moreover, 80% of the new jobs demand will come from Tier 2 and Tier 3 districts of just 10 states.

However, the key indices gained the ground in afternoon deals to rally in northward direction, as Commerce and Industry Minister Suresh Prabhu hinted at improvement in India’s ranking in the World Bank’s ease of doing business report, to be released on Wednesday. India jumped 30 places to rank 100th among 190 nations in the last year’s World Bank’s ease of doing business index. Adding more optimism, DIPP Secretary Ramesh Abhishek said that the Department of Industrial Policy and Promotion (DIPP) is working with the tax department and regulators to ease the rules and laws for startups to support budding entrepreneurs. The markets participants also got relief with SBI study report showed that inflation is likely to remain below 4% in the coming months, notwithstanding possible increase in onion prices. Sentiments were positive with a private report stating that India's long-term growth story remains robust despite global headwinds as well as rupee depreciation and high oil prices. Meanwhile, the high level the Financial Stability and Development Council (FSDC) meeting chaired by Finance Minister Arun Jaitley discussed liquidity issues being faced by the non-banking financial companies.

On the global front, European markets were trading in green, despite euro area economy grew at a slower pace in the third quarter. The preliminary flash estimate from Eurostat showed that gross domestic product expanded only 0.2% sequentially after rising 0.4% in the second quarter. The rate was forecast to remain at 0.4%. Elsewhere, survey data revealed further deterioration in economic confidence in Eurozone. The economic sentiment index slid to 109.8 in October from 110.9 a month ago. Asian markets ended in green, despite the latest PMI numbers from China confirming a broad-based decline in economic activity. China's official manufacturing PMI fell to 50.2 in October, the lowest since July 2016 and down from 50.8 in September, in a sign of further loss of momentum in the world's second-largest economy. The services PMI dropped from 54.9 to 53.9, marking the weakest pace of expansion since August 2017.

Back home, telecom stocks ended higher, amid reports that the Department of Telecom (DoT) has constituted committees to work on objectives set by National Digital Communications Policy, especially around concerns raised by service providers. Stocks related to power sector ended higher, with reports that the government is looking to execute at least two mergers among central public sector enterprises (CPSEs) in the power sector to step up the disinvestment process and meet its target. Further, stocks related to rubber industry remained in focus with report that the projected growth in the rubber consumption which is a corollary to overall economic development of the country necessitates the need to expand rubber production though the current prolonged phase of natural rubber price crash has impacted the growers deeply.

Finally, the BSE Sensex surged 550.92 points or 1.63% to 34,442.05, while the CNX Nifty was up by 188.20 points or 1.85% to 10,386.60.

The BSE Sensex touched a high and a low of 34,463.38 and 33,587.24, respectively and there were 22 stocks advancing against 9 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index rose 1.56%, while Small cap index was up by 1.38%.

The top gaining sectoral indices on the BSE were IT up by 3.53%, TECK up by 3.18%, Consumer Durables up by 2.32%, Healthcare up by 2.01% and Capital Goods up by 1.85%, while Metal down by 1.40% was the lone losing index on BSE.

The top gainers on the Sensex were HDFC up by 5.78%, Indusind Bank up by 4.47%, Infosys up by 4.02%, Axis Bank up by 3.43% and Yes Bank up by 3.30%. On the flip side, Coal India down by 3.53%, Tata Steel down by 2.25%, Maruti Suzuki down by 1.33%, Adani Ports & SEZ down by 0.85% and Kotak Mahindra Bank down by 0.60% were the top losers.

Meanwhile, in order to enhance the share of overall service sector in India’s Gross Domestic Product (GDP), Commerce and Industry Minister Suresh Prabhu has said that the government will work on promoting the growth of the education sector. He informed that the government was working with different universities and institutions in this regard. He also indicated that presently, the services sector accounted for two-third of India’s GDP.

According to the minister, promoting growth of services sector would help dealing with the issue, as employment generation is a major challenge. He also said that the educational institutes have to keep in mind the emerging challenges being faced by industries and introduce modern technologies like artificial intelligence, robotics and big data.

In February, the Union Cabinet had decided to give focused attention to 12 champion service sectors and mandated the identified nodal ministries and departments to formulate sectoral action plans under the dedicated fund of Rs 5,000 crore. The 12 champion service sectors includes IT, tourism and hospitality, transport, accounting, audio visual, legal, education and environment.

The CNX Nifty traded in a range of 10,396.00 and 10,105.10. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 8.59 %, Indiabulls Housing Finance up by 8.17%, HDFC up by 5.70%, HCL Tech. up by 5.69% and UPL up by 5.46%, On the flip side, Coal India down by 3.57%, Tata Steel down by 2.04%, Dr. Reddy’s Lab down by 2.02%, Hindalco down by 1.70% and Maruti Suzuki down by 1.45% were the top losers.

European markets were trading in green; UK’s FTSE 100 zoomed 104.16 points or 1.46% to 7,140.01, France’s CAC rose 101.02 points or 1.99% to 5,079.55 and Germany’s DAX was up by 126.63 points or 1.11% to 11,414.02.

Asian markets ended higher on Wednesday as investors digested a raft of economic data and corporate earnings results. Stocks in China ended higher despite the country reporting lower-than-expected manufacturing growth in October. China's official manufacturing PMI fell to 50.2 in October, the lowest since July 2016 and down from 50.8 in September, in a sign of further loss of momentum in the world's second-largest economy. The services PMI dropped from 54.9 to 53.9, marking the weakest pace of expansion since August 2017. Japanese shares hit a one-week high and the yen edged lower against the dollar after the Bank of Japan left interest rates steady, cut its inflation forecasts and signaled it was a long way off from exiting its massive stimulus program. Investors shrugged off weak data showing that industrial production in the country fell 1.1 percent in September from the previous month, missing expectations for a decline of 0.3 percent. Meanwhile, Hong Kong shares rose following a rebound on Wall Street, but logged their worst monthly loss since January 2016 amid a global equity sell-off triggered by concern over the impact of a Sino-American trade war.