Markets stage recovery after steep fall

Indian equity markets heaved a sigh of relief on Tuesday, after both the larger peers, Sensex and Nifty, staged recovery to end the trading session in green terrain. The markets made a worst start of the day, as sentiments got hit with the Reserve Bank of India (RBI) governor Urjit Patel’s unexpected resignation from his post on Monday. The government and the RBI have been fighting for weeks over how much autonomy the RBI should have as the administration of Prime Minister Narendra Modi seeks to reduce curbs on lending and to gain access to the RBI’s surplus reserves. Adding more worries among the traders, Moody’s Investors Service’s said that the independence of a country’s central bank is an important consideration while assessing a country’s institutional strength and any attempt by the government to curtail it would be credit negative. To a query on the sovereign rating impact of the developments around RBI, Moody’s said while the motivation for the RBI Governor’s resignation is unclear, the independence of a country’s central bank is an important consideration in their assessment of a sovereign’s institutional strength.

However, in the second half of the session, the key indices erased all of their losses to settle the day on positive note, tracking firm European markets. The street took support with Commerce and Industry Minister Suresh Prabhu’s statement that the New Industrial Policy, which will replace the 27-year-old existing policy, has been sent for the Union Cabinet’s consideration. The new industrial policy aims to resolve bottlenecks arising from inadequate infrastructure, restrictive labour laws and complicated business environment. Some relief came after the government made the entire 60% of the corpus withdrawn at the time of retirement tax free. Investors took note of Former chief economic adviser Arvind Subramanian’s statement that the inclusion of petrol and diesel in the Goods and Services Tax (GST) ambit is not possible until the revenues under the new tax regime stabilize. Meanwhile, assembly poll results showed BJP losing power in Rajasthan and Chhattisgarh, while having a close finish in Madhya Pradesh.

On the global front, European markets were in green, as Germany's merchandise exports grew more-than-expected in October and at the fastest pace in five months. The preliminary figures from Destatis showed that exports increased a calendar ad seasonally adjusted 0.7 percent from September, when they declined 0.4 percent. Street overlooked a survey data report from Bank of France showed that France's economy is set to expand at a slower rate in the fourth quarter than estimated earlier. The bank revised down its growth forecast for the fourth quarter by 0.2 percentage point to 0.2 percent. Meanwhile, UK economic growth slowed in the three months to October, mainly due to a fall in car sales and stagnation in manufacturing, as the uncertainty surrounding the country's decision to leave the European Union, dubbed Brexit, intensified. Gross domestic product grew 0.4 percent in the three months to October, which was slower than the 0.6 percent expansion in the September quarter. Asian markets ended mixed, with investors cheering reports that Chinese Vice Premier Liu, US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer have discussed trade issues despite a diplomatic row over the arrest of a senior Chinese businesswoman.

Back home, airline industry stocks ended mixed, after rating agency ICRA assigned a negative outlook to the domestic airline industry even as it expects the passenger traffic growth to remain healthy at about 15-16% in the medium-term, while selected stocks of tourism industry ended higher, amid reports that the Government of India and the Asian Development Bank (ADB) signed in New Delhi a Loan Agreement for $31 million to build-up the State Tourism Industry and boost visitor arrivals. Further, gems and jewellery related stocks remained in focus, with the Gems and Jewellery Export Promotion Council’s (GJEPC) report that the gems and jewellery exports are likely to grow by up to 5% this financial year, mainly aided by improving demand in the US market during the upcoming Christmas season. Besides, stocks of port sector remained in limelight, with data report released by Ministry of Shipping which showed that the major ports in India have recorded a growth of 4.83% and together handled 461.21 million tonnes of cargo during the period April to November, 2018 as against 439.96 million tonnes handled during the corresponding period of previous year.

Finally, the BSE Sensex surged 190.29 points or 0.54% to 35,150.01, while the CNX Nifty was up by 60.70 points or 0.58% to 10,549.15.

The BSE Sensex touched a high and a low of 35,207.33 and 34,426.29, respectively and there were 20 stocks advancing against 11 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 1.54%, while Small cap index was up by 1.54%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.60%, Healthcare up by 1.93%, Consumer Disc up by 1.70%, FMCG up by 1.41% and Basic Materials up by 1.23%, while Oil & Gas down by 0.21% was the lone losing index on BSE.

The top gainers on the Sensex were Yes Bank up by 7.29%, Sun Pharma up by 5.75%, Asian Paints up by 4.03%, SBI up by 2.85% and Axis Bank up by 2.42%. On the flip side, Hero MotoCorp down by 1.58%, Bharti Airtel down by 1.43%, HDFC Bank down by 1.36%, ICICI Bank down by 1.04% and Adani Ports & SEZ down by 0.99% were the top losers.

Meanwhile, the finance ministry stated that the income tax department has collected Rs 6.75 lakh crore in gross direct tax, comprising personal income tax (PIT) and corporate income tax (CIT), during the April-November period of current fiscal year (FY19), which is 15.7% higher than the gross collections for the corresponding period of last year. Direct Tax collections grew mainly on account of income tax mop-up from individuals.

Refunds worth Rs 1.23 lakh crore have been issued in the eight months of the current fiscal, which is 20.8% higher than refunds issued in the same period last year. After adjusting for refunds, net collections have increased by 14.7% to Rs 5.51 lakh crore during April-November, 2018. The net direct tax collections represent 48% of the total budget estimates of direct taxes for financial year 2018-19 (Rs 11.50 lakh crore).

Gross collections in CIT and PIT grew 17.7% and 18.3%, respectively. After adjustment of refunds, the net growth in CIT collections is 18.4% and that in PIT collections is 16%. The finance ministry said collections of the corresponding period of last fiscal also included extraordinary collections under the Income Declaration Scheme (IDS), 2016, amounting to Rs 10,833 crore (third and last instalment of IDS), which do not form part of the current year’s collections.

The CNX Nifty traded in a range of 10,567.15 and 10,333.85. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 8.09%, Sun Pharma up by 6.22%, Asian Paints up by 3.82%, Kotak Mahindra Bank up by 3.39% and Bajaj Finserv up by 3.09%. On the flip side, HPCL down by 3.00%, Indian Oil Corporation down by 1.75%, Bharti Airtel down by 1.61%, HDFC Bank down by 1.56% and BPCL down by 1.29% were the top losers.

All European markets were trading in green; UK’s FTSE 100 surged 63.56 points or 0.95% to 6,785.10, France’s CAC rose 69.48 points or 1.47% to 4,811.86 and Germany’s DAX was up by 146.84 points or 1.38% to 10,768.91.

Asian markets ended on a mixed note on Tuesday after US shares recovered from sharp losses to close higher overnight. A cautious undertone prevailed as US-China trade tensions simmered, oil held its biggest loss in two weeks and UK Prime Minister Theresa May postponed a Parliamentary vote on Brexit deal. Chinese shares ended higher in very thin trade as Beijing confirmed that it is still in trade talks with Washington, and as investors looked to market support from government policies aimed at countering slowing growth. Investors awaited industrial output and retail sales figures for November, due on Friday. Meanwhile, Japanese shares fell modestly to close near their lowest level since March, dragged down by financials and cyclical stocks.