Bulls take charge on D-Street

Bulls took charge on Dalal Street on Thursday, as both Sensex and Nifty, ended the trading session with the strong gains of over 1.50% each. The markets made a fabulous start of the day, after SBI Research’s latest report indicated that the government is likely to meet the fiscal deficit target this year and pegged fiscal deficit at Rs 6.72 trillion or 3.2% of gross domestic product (GDP) for next fiscal year (2019-20), assuming a moderate nominal GDP growth of 11.7%. It added that the fiscal gap will be met at the budgeted 3.3 percent for FY19. Traders took encouragement with Commerce Minister Suresh Prabhu’s statement that the government will release the new e-commerce policy soon which is awaiting approval from the Department of Industrial Policy and Promotion (DIPP). The street also took note of report that Indian companies’ foreign borrowing nearly trebled to $3.81 billion in December 2018 as compared to the same period last year. According to data from the Reserve Bank of India (RBI), of the total borrowing amount in December, $3.77 billion was mobilized through external commercial borrowings (ECBs) in the overseas markets, while $37.04 million was through rupee-denominated bonds (RDBs).

The markets extended their gains in the second half of the session to settle near their intraday high points, mirroring positive European markets. Intense buying by the traders ahead of expiry of January futures & options contracts, also contributed to the gaining momentum. The markets participants were seen taking support from a report that the GST officials are working out mechanism to prompt taxmen to initiate profiteering complaints, which could be taken up for further investigation by the Directorate General of Anti-Profiteering. The street paid no heed towards the National Sample Survey Office’s (NSSO) latest report showing that India's unemployment rate reached to 6.1% in 2017-18, hitting a 45-year high. The rate was the highest since 1972-73. Investors also shrugged off Fitch Ratings’ latest report warning of a second consecutive year of fiscal slippage in the event of Finance Minister Piyush Goyal resorting to populist spending to win over lost vote base.

On the global front, European markets were trading in green, after Italy's consumer confidence strengthened in January for the first time in three months, while the morale in the manufacturing sector weakened for a fourth month in a row. The survey data from the statistical office ISTAT showed that the consumer confidence index rose to 114 from 113.2 in December. All sub-indexes improved in January. Adding more optimism, Eurozone's economy maintained its growth momentum in the fourth quarter of 2018, and the monthly unemployment rate remained unchanged in December. Gross domestic product grew 0.2 percent from the third quarter, when the economy expanded at the same pace. Asian markets ended mostly in green, as the Fed's dovish tone helped investors shrug off weak manufacturing data from China. Activity in China's vast manufacturing sector continued to contract in January, albeit at a slower pace. The latest survey from the National Bureau of Statistics showed with a PMI score of 49.5.

Back home, metals stocks ended higher, as India Ratings and Research (Ind-Ra) maintained a stable outlook on the base metals for the next financial year. It also said that within the sector, domestic aluminium prices are expected to remain stable, despite a likely decline in demand, while zinc prices may taper off because of an increase in global supply. However, stocks related to the textile sector ended mixed, despite India Ratings’ report that India's textiles sector may see higher growth following robust domestic demand and depreciating rupee value. It has maintained a stable outlook for the textile sector for 2019-20 following strong domestic demand, waning impact of the disruptions due to GST and demonetisation and rising exports aided by a weak rupee.

Finally, the BSE Sensex gained 665.44 points or 1.87% to 36,256.69, while the CNX Nifty was up by 179.15 points or 1.68% to 10,830.95.

The BSE Sensex touched a high and a low of 36,278.13 and 35,740.07, respectively and there were 26 stocks advancing against 05 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.42%, while Small cap index up by 0.80%.

The top gaining sectoral indices on the BSE were IT up by 2.13%, Energy up by 2.10%, TECK up by 1.87%, Oil & Gas up by 1.73% and Bankex up by 1.70%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Axis Bank up by 4.64%, Tata Motors up by 3.99%, Tata Motors - DVR up by 3.65%, Infosys up by 3.41% and Reliance Industries up by 2.70%. On the flip side, Yes Bank down by 2.56%, HCL Tech. down by 1.17%, Bajaj Finance down by 1.00%, ICICI Bank down by 0.27% and Coal India down by 0.13% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that Indian textile sector is likely to witness higher growth on the back of robust domestic demand and falling rupee value against dollar. It has maintained a stable outlook for the sector for 2019-20 following strong domestic demand, fading impact of the disruptions due to GST and note ban and rising exports aided by a weak rupee.

According to the report, the textile companies are likely to improve cash-flow from operations for FY20, as their working capital would stabilise as challenges related to demonetisation and the GST subside. It also said that the sector is likely to continue deleveraging gradually in FY20 in view of strong annual growth generation and some moderation in the debt level. It also noted that the liquidity of the majority of players in the sector is likely to remain adequate, along with an improvement in operational cash generation, backed by steady raw material costs and strong demand from end-user segments.

The ratings agency further said that the India's textile exporters are likely to continue to benefit from improved cost competitiveness because of weak rupee, which would drive volume growth. It highlighted that over the first nine-month of FY19, the Indian rupee depreciated at a higher rate against the US dollar than the currencies of key apparel-exporting countries like Vietnam and Bangladesh. Besides, it noted that India's apparel exports also showed signs of recovery in Q3 (October-December) of FY19 and are likely to increase in FY20 after remaining weak for three years.

The CNX Nifty traded in a range of 10,838.05 and 10,678.55. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 4.32%, GAIL India up by 3.54%, Infosys up by 3.32%, Titan up by 3.21% and Tata Motors up by 3.06%. On the flip side, Yes Bank down by 2.76%, Zee Entertainment down by 2.73%, Bajaj Finserv down by 2.21%, Indiabulls Housing Finance down by 1.62% and HCL Tech. down by 1.22% were the top losers.

European markets were trading in green; UK’s FTSE 100 added 45.59 points or 0.66% to 6,987.22, France’s CAC rose 15.76 points or 0.32% to 4,990.52 and Germany’s DAX was up by 17.96 points or 0.16% to 11,199.62.

Asian markets ended mostly higher on Thursday after the US Federal Reserve left interest rates unchanged, as widely expected, and said it would be patient in lifting borrowing costs. Japanese shares ended sharply higher after the Fed sounded more dovish than expected and said risks to the outlook are roughly balanced. Further, Chinese shares ended higher even as data showed the country's manufacturing activity contracted for the second consecutive month in January. Activity in China's vast manufacturing sector continued to contract in January, albeit at a slower pace, the latest survey from the National Bureau of Statistics showed with a PMI score of 49.5. That beat expectations for a score of 49.3 and was up from 49.4 in December. The non-manufacturing index came in at 54.7, topping forecasts for 53.9 and up from 53.8 in the previous month.