Bulls take firm strides; Sensex regains 37,500 mark

Bulls were on a run during Tuesday’s trading session, with the both Indian equity indices, the Sensex and the Nifty, closing the day higher by smart gains of 482 and 133, respectively. Key indices made a fabulous start, aided by a private report stating that hiring activities registered 16 per cent growth this February mainly led by the IT and software industry that clocked a 38 per cent growth. The Naukri JobSpeak Index for February 2019 stood at 2,415 from 2,087 in February 2018. Adding optimism among the market participants, the Cotton Textiles Export Promotion Council (TEXPROCIL) Chairman K.V. Srinivasan said that rebate of state and central taxes will improve the competitiveness of made ups products in the export markets. Buying also crept in with a report that key policymakers from India and African nations will brainstorm on strategies for scaling up bilateral trade volume to $150 billion in the next few years at the India-Africa Project Partnerships Conclave.

Domestic Sentiments remained upbeat throughout the day, with a report stating that in a major overhaul of oil and gas exploration permits, the government will not charge any share of profit on hydrocarbons produced from less explored areas as it looks to attract the elusive private and foreign investment to raise domestic output. Positive cues from the global markets also supported the rally. Investors took a note of the report that the Reserve Bank of India’s (RBI) board, which included the present Governor Shaktikanta Das as a director, had warned of short-term negative impact of demonetisation on the country's economic growth and observed that the unprecedented move will not have any material impact on tackling the black money menace.

On the global front, European markets were trading mostly in green, even though the Bank of France revised its growth estimate for the first three months of the year to 0.3 percent from 0.4 percent predicted earlier. The survey data from the bank showed that manufacturing business confidence improved to 101 in February from 99 in January. The confidence indicator for the services sector was unchanged at 101 and that for construction was steady at 105. Asian markets ended mostly in green, amid improved risk appetite after the US retail sales report for January showed a rebound and the EU said it is now up to MPs to decide the next steps for Brexit.

Back home, realty stocks remained in focus, amid reports that the Goods and Services Tax (GST) Council is scheduled to meet on March 19 to finalise guidelines to support the changed tax rate structure for underconstruction houses. Housing finance companies stocks were in limelight, with global rating agency Moody's report that the National Housing Bank's proposed guidelines to tighten the capital adequacy and leverage norms is credit positive for housing finance company (HFCs) but will not address their issues regarding the key credit risk, funding and liquidity.

Finally, the BSE Sensex gained 481.56 points or 1.30% to 37,535.66, while the CNX Nifty was up by 133.15 points or 1.19% to 11,301.20.

The BSE Sensex touched a high and a low of 37,586.63 and 37,230.85, respectively and there were 21 stocks advancing against 10 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index surged 0.65%, while Small cap index was up by 1.07%.

The top gaining sectoral indices on the BSE were Realty up by 2.60%, Telecom up by 2.44%, Capital Goods up by 2.23%, Bankex up by 1.70% and Industrials up by 1.65%, while IT down by 0.22% was the lone losing index on BSE sectoral front.

The top gainers on the Sensex were Bharti Airtel up by 5.12%, Indusind Bank up by 3.69%, ICICI Bank up by 3.27%, Larsen & Toubro up by 3.08% and Sun Pharma up by 2.32%. On the flip side, Bajaj Finance down by 1.30%, Infosys down by 0.67%, NTPC down by 0.59%, ONGC down by 0.52% and Coal India down by 0.29% were the top losers.

Meanwhile, CRISIL Research in its latest report has said that the outlook for solar energy development in India is constrained as capacity additions get delayed. It noted that inconsistent policy measures on part of the government have dampened the investors’ sentiment in the sector, thereby leading to a slowdown in the capacity addition. It expects solar power capacity additions of 48-50 GW between fiscals 2019 and 2023. The country has set an ambitious target of having 175 GW of renewables including 100 GW of solar energy by 2022.

The report mentioned that over fiscals 2017 to 2019, while previously tendered capacities continued to be commissioned apace, certain risks to future project implementation manifested. There were frequent bid cancellations, lack of clarity on GST procedures, and cost pressure from the imposition of the safeguard duty on imported cells/modules. Besides, it noted that while the good and services tax (GST) clarity was lacking for over a year with a final decision taken in December by the GST council, it ended with an increase in taxation compared to what was expected by the industry.

Similarly, the safeguard duty has turned out to be a double whammy of sorts, impacting costs of solar power projects and not resulting in any significant offtake for the domestic manufacturing sector. This was coupled by the cancellation of bids post auctions as state utilities / SECI (Solar Energy Corporation of India found tariffs to be higher than expectations. Close to 4.7 GW was cancelled in such a manner over March - December 2018.

The CNX Nifty traded in a range of 11,320.40 and 11,227.00. There were 30 stocks advancing against 19 stocks declining, while 1 remain unchanged on the index.

The top gainers on Nifty were Bharti Airtel up by 5.00%, ICICI Bank up by 3.42%, Indusind Bank up by 3.24%, Larsen & Toubro up by 3.15% and Adani Ports & SEZ up by 2.85%. On the flip side, Eicher Motors down by 2.62%, Bajaj Finance down by 1.36%, Bharti Infratel down by 1.16%, HPCL down by 0.91% and JSW Steel down by 0.87% were the top losers.

European markets were trading mostly in green; France’s CAC increased 10.15 points or 0.19% to 5,276.11 and Germany’s DAX increased 8.32 points or 0.07% to 11,551.80, while UK’s FTSE 100 decreased 5.68 points or 0.08% to 7,124.94.

Asian markets ended mostly higher on Tuesday after US retail sales stabilized in January, helping ease concerns over the state of the economy. The market sentiment was also bolstered after British Prime Minister Theresa May won legally binding assurances from the European Union in an updated Brexit deal, just ahead of a vote in the British parliament. Chinese shares ended higher on trade optimism after media reports suggested that Chinese Vice-Premier Liu He held a telephone call with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer on key issues in their trade talks. Further, Japanese shares ended up, with gains in global equities and continued weakness in the yen helping underpin investor sentiment.