Bulls regain lost ground; Sensex soars over a percent

Indian equity benchmarks bounced back on Tuesday to settle trading session with strong gains of over a percent. After slightly higher start, the markets traded lackluster with marginal gains for the most part of the day, affected by a private report stating that food inflation in the country is likely to go up to 2 percent in fiscal year 2019-20 from the 0.7 percent estimated for FY19. Adding some worries among the market participants, the Employees State Insurance Corporation (ESIC) in its latest ‘payroll data’ report said that job creation dropped by 6.91% in January 2019 to 11.23 lakh as compared to 12.06 lakh in the same month last year. Market gains were also limited, with state-run India Meteorological Department’s (IMD) statement that its study of global models shows that there is little chance of a strong El Nino in 2019. A strong El Nino could have an adverse impact on India’s southwest monsoon that starts from June as almost 80 per cent of El Nino years have seen below normal rains.

However, the key indices gained the momentum in the last hours of the trade to settle near day’s high points. Domestic sentiments got boost with the finance ministry’s statement that the liquidity situation in the economy was comfortable, and it will improve further with the central bank’s move to infuse Rs 35,000 crore through the rupee-dollar swap arrangement, announced last week. Investors took encouragement, after the Vice President of India, M. Venkaiah Naidu called for a renewed focus on agribusiness, value addition and diversification of agriculture to make farming much more sustainable, profitable and rewarding. Some support also came with a report stating that India's share in the final consumption of consumer goods is expected to double by 2030 and the favourable demographics will soon take it ahead of China in regional market dynamics. Some relief also came with reports that the commerce ministry introduced an online system for exporters to obtain export licence for restricted category goods, a move aimed at promoting paperless work and ease of doing business.

On the global front, European markets were trading in green, despite France's manufacturing confidence weakened slightly in March, after remaining stable in the previous two months. The survey data from the statistical office INSEE showed that the factory confidence indicator fell to 102 from 103 seen in each of the previous three months. In November, the index reading was 105. Separately, Spain producer price inflation rose in February for the first time in five months. The data from the statistical office INE showed that the producer price index rose 1.9 percent year-on-year in February, after a 1.7 percent increase in each of the previous two months. Asian markets ended higher, as fears of a possible US recession receded and British prime minister Theresa May told the House of Commons that the government lacks the parliamentary support to hold a third vote on its Brexit deal.

Back home, telecom sector stocks ended higher, despite credit rating agency, ICRA’s latest report stating that the Reliance Jio-induced pains for the telecom sector will continue with the industry slated to report decline in revenue for the third consecutive year. However, it said there is room for a minor recovery in the upcoming fiscal year 2019-20. Further, stocks related to the oil industry remained in focus, amid Moody's Investors Service latest report showing that India's oil companies will continue paying high dividends, which will be negative for refiners, but the oil producers will not be as significantly affected.

Finally, the BSE Sensex rose 424.50 points or 1.12% to 38,233.41, while the CNX Nifty was up by 129.00 points or 1.14% to 11,483.25.

The BSE Sensex touched a high and a low of 38,297.70 and 37,800.08, respectively and there were 24 stocks advancing against 07 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 1.09%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were Bankex up by 2.19%, Energy up by 2.14%, Power up by 1.70%, Utilities up by 1.65% and PSU up by 1.31%, while IT down by 0.58% and TECK down by 0.41% were the only losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.28%, SBI up by 3.23%, Vedanta up by 3.18%, Reliance Industries up by 3.16% and ICICI Bank up by 2.75%. On the flip side, Infosys down by 1.23%, Bajaj Auto down by 0.85%, ITC down by 0.68%, Larsen & Toubro down by 0.37% and TCS down by 0.26% were the top losers.

Meanwhile, in order to promote innovation in FinTech space, Reserve Bank of India (RBI) Governor Shaktikanta Das has said the central bank will issue guidelines for setting up a regulatory sandbox or innovation hub for the fintech startups in the next two months. He noted that a regulatory sandbox will help FinTech firms to launch innovative products at a lower cost and in less time. He also explained that a regulatory sandbox is a framework set up by a regulator that allows FinTech startups to conduct live experiments in a controlled environment under supervision.

Observing that FinTech has the potential to reshape the financial services and financial inclusion landscape in India in fundamental ways, Das said that it can reduce costs and improve access and quality of financial services. He also said “we have to strike a subtle balance between effectively utilising FinTech while minimising its systemic impacts.” He stated that the RBI has encouraged banks to explore the possibility of establishing new alliances with FinTech firms as it could be pivotal in accelerating the agenda of financial inclusion through innovation. Adding further, he said that it is essential that flow of investments to this sector is unimpeded to realise its full potential. He also said that it is imperative to create an ecosystem which promotes collaboration while carefully paying attention to the implications that it has for the macro economy.

Pointing out some of the challenges, the RBI governor said that risks for FinTech products may also arise from cross border legal and regulatory issues. He also said that data confidentiality and customer protection are major areas that also need to be addressed. Emphasizing that India has been at the forefront of this revolution, he said, a recent global survey ranks India second in terms of FinTech adoption, with an adoption rate of 52 percent. He added that there are as many as 1,218 FinTech firms operating in India which have created a large number of jobs and have generated a healthy appetite for investment.

The CNX Nifty traded in a range of 11,496.75 and 11,352.45. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were NTPC up by 3.99%, SBI up by 3.67%, Vedanta up by 3.57%, Reliance Industries up by 3.36% and Bajaj Finance up by 3.17%. On the flip side, Tech Mahindra down by 2.53%, Indian Oil Corporation down by 1.46%, UPL down by 1.07%, Infosys down by 1.01% and Wipro down by 0.60% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 31.54 points or 0.44% to 7,209.12, France’s CAC rose 21.90 points or 0.42% to 5,282.54 and Germany’s DAX was up by 1.33 points or 0.01% to 11,347.98.

Asian markets ended mostly higher on Tuesday after the previous day's steep losses fuelled by concerns about the global economic growth and a possible recession in the US. Investors kept a close eye on Brexit developments after UK MPs temporarily sized control of the Brexit process from the British Prime Minister Theresa May, in a move that gives them control of Parliament's agenda on Wednesday. Japanese markets recovered from steep losses in the previous session as a weaker yen boosted shares of exporters. Though, Chinese shares extended their losses as investors remained concerned with a possible recession in the US and the next round of China-US trade talks.