Bourses build on gains for second day; Sensex regains 35,500 mark

Equity benchmarks remained in better form for the second straight session on Tuesday, with Sensex and Nifty surpassing their crucial psychological levels of 35,500 and 10,650, respectively. After a cautious start, the markets remained volatile during first half of the session, with SBI research report stating that the Gross Domestic Product (GDP) growth in the September quarter is expected to decelerate to 7.5-7.6% over the previous three-month period mainly due to a slowdown in rural demand. Adding some concerns, SEBI’s latest report showed that Indian companies raised funds worth Rs 36,176 crore by issuing securities on public and private placement basis during October, registering a decline of 17% compared to September. Domestic sentiments were impacted by India Ratings and Research’s statement that India is set to miss its fiscal deficit target for the year ending March 2019 due to a shortfall in revenues and lower-than-targeted disinvestment proceeds. The country’s 2019 fiscal deficit target has been pegged at 3.3% of its GDP or 6.24 trillion rupees ($88.45 billion). But the credit rating agency estimated fiscal deficit at 6.67 trillion - or 3.5% of GDP.

However, key indices recovered from the losses to build notable gains in the second half of the session, supported by the think-tank’s Vice-Chairman Rajiv Kumar’s statement the Niti Aayog is exploring ways to encourage more domestic companies to be among the top multinational corporations in the world. Some comfort also came with CRISIL Research expecting 2018-19 to be a good one for India’s small and medium enterprise (SME) leather exporters, given a pick-up in demand from the US and expectations of the Donald Trump administration imposing tariffs on Chinese leather footwear - not in the tariff list currently - early next calendar year. Adding more comfort, International Labour Organisation (ILO) report showed that India recorded the highest average real wage growth in South Asia during 2008-17. The report also showed that in South Asia, India led the average real wage growth in 2008-17 at 5.5 against a regional median of 3.7.

On the global front, European markets were trading mixed, as German business confidence eased for a third consecutive month in November as the economy is cooling down. The results of the survey by the Ifo Institute showed that the Ifo business confidence indicator fell to 102 from 102.9 in October, which was revised from 102.8. The street had expected a reading of 102.3. Asian markets ended in red, after US President Donald Trump said he would likely raise the punitive tariffs on $200 billion of Chinese goods. He also threatened to impose tariffs on all remaining Chinese imports, if upcoming trade talks fail to produce a deal. Adding more worries, profit growth at China's industrial firms slumped for a sixth straight month in October as demand cooled further amid mounting uncertainties stemming from the US-China trade war.

Back home, most of the banking sector stocks ended higher, amid reports that the government will infuse Rs 420 billion in the state-owned banks by March-end and the next tranche would be released as early as next month. Auto stocks also settled higher, aided by industry body CII’s report that the domestic automotive aftermarket, which has grown at a compounded annual growth rate (CAGR) of 14% in the last five years, is expected to touch Rs 75,000 crore by 2020, while metal stocks remained under pressure, amid private report that aluminium companies floundered in domestic sales during the July-September quarter of this fiscal despite robust demand and firm production growth. Besides, tyre stocks remained in focus after India's natural rubber imports in October jumped 63% from a year ago to 62,047 tonnes, as local consumption surged amid drop in overseas prices.

Finally, the BSE Sensex surged 159.06 points or 0.45% to 35,513.14, while the CNX Nifty was up by 57.00 points or 0.54% to 10,685.60.

The BSE Sensex touched a high and a low of 35,555.16 and 35,262.97, respectively and there were 14 stocks advancing against 17 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.32%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were IT up by 1.67%, TECK up by 1.36%, Energy up by 1.18%, Oil & Gas up by 0.86% and Utilities up by 0.75%, while Healthcare down by 0.90%, Metal down by 0.80%, Telecom down by 0.67%, Consumer Durables down by 0.20% and FMCG down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.53%, TCS up by 2.29%, Reliance Industries up by 1.61%, Indusind Bank up by 1.29% and Maruti Suzuki up by 1.27%. On the flip side, Sun Pharma down by 3.34%, Hero MotoCorp down by 3.12%, Yes Bank down by 2.55%, Wipro down by 2.18% and Bajaj Auto down by 2.01% were the top losers.

Meanwhile, with an aim to help Indian companies, the Reserve Bank of India (RBI) has relaxed norms for external commercial borrowings (ECBs). The RBI has reduced hedging requirements for external commercial borrowings (ECBs) to 70% from 100%.

The relaxed norms will apply to the ECBs with a maturity period between 3 and 5 years. The RBI also clarified that the ECBs raised prior to this circular will be required to mandatorily roll over their existing hedge only to the extent of 70% of outstanding ECB exposure.

The move will help Indian companies borrow funds relatively cheaply as hedging cost added up substantially to the final cost. This will also certainly help bring down the cost from overseas sources for India companies.

The CNX Nifty traded in a range of 10,695.15 and 10,596.35. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Infosys up by 3.15 %, Bajaj Finserv up by 3.00%, GAIL up by 2.71%, TCS up by 2.65% and BPCL up by 2.43%. On the flip side, Hero MotoCorp down by 3.84%, Sun Pharma down by 3.81%, Yes Bank down by 3.03%, Bharti Airtel down by 2.39% and Wipro down by 1.93% were the top losers.

European markets were trading mixed; CAC 40 added 4.43 points or 0.09% to 4,999.41 and DAX gained 5.25 points or 0.05% to 11,359.97, while FTSE 100 was down by 10.94 points or 0.16% to 7,025.06.

Asian markets closed mostly lower on Tuesday. Investors took trade tensions in stride after US President Donald Trump said in an interview with the Wall Street Journal that it was ‘highly unlikely’ he would delay an increase in tariffs on Chinese goods to 25 percent from 10 percent. Trump also suggested that the US could slap 10 percent tariffs on Apple's iPhones and laptops imported from China. Though, Japanese shares rose notably as a strong start to the holiday season spurred optimism about the US economy.