Markets extend rally on Tuesday; Sensex settles above 39K mark

Key equity benchmarks extended their rally on Tuesday to end with strong gains. The markets began with marginal gains, on the back of sluggish growth of microeconomic indicators. The growth of eight core infrastructure industries slowed down to 2.1% in February 2019 as compared to 5.4% in February 2018, due to fall in output of crude oil and refinery products, while the Indian manufacturing sector lost its growth momentum in the month of March, on the back of softer increases in new orders, production, input buying and employment. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 52.6 in March from 54.3 in February. Traders took a note of the report stating that apart from a shortfall of nearly Rs 35,000 crore in direct tax revenue, the Centre seems to have suffered a larger deficit of Rs 60,000 crore or thereabouts in its share of goods and services tax (GST) revenue also for the fiscal year (FY19).

But, in volatile trade, key indices managed to add gains during noon deals, supported by the Reserve Bank of India’s (RBI) statement that it will inject long-term liquidity worth $5 billion into the banking system through dollar-rupee buy-sell swap for a tenure of three years. The swap auction will be held on April 23, 2019. Some comfort also came with a private report that the government has been able to contain its fiscal deficit around 3.4% of the GDP in 2018-2019 by resorting to withdrawals/cash support from public accounts and savings on expenditure. Adding relief, ratings agency CRISIL in its half-yearly report on credit movements said that system wide non-performing asset (NPA) ratios will improve by 180 basis points (bps) to 8.5 percent in March 2020 from FY19 levels on the back of moderation in slippages coupled with recoveries from the bankruptcy resolutions. It also noted that public sector banks (PSBs) will turn more profitable for first time in four years.

On the global front, European markets were trading in green, even though UK construction sector continued to shrink in March, albeit at a slightly slower pace, driven by sustained weakness in commercial work and civil engineering. The survey data from IHS Markit showed that the CIPS construction purchasing managers' index, or PMI, rose to 49.7 in March from 49.5 in February. However, a reading below 50 suggests decline in activity. Asian markets ended mostly in green, as positive factory activity surveys from China and the United States provided a much-needed boost to investor confidence.

Back home, infrastructure stocks remained in focus, as a study by the Asian Infrastructure Investment Bank (AIIB) noted that road building in India is cheapest in Asia after the Philippines. AIIB further noted that the result holds despite making allowances for cross-currency differences as well as variations in local cost due to labour and others. Besides, stocks related to the auto industry remained in limelight, on the back of March sales data. Shivam Autotech has achieved around 4% increase in sales in the month of March 2019 compared to corresponding month in the previous financial year, while TVS Motor Company has registered sales of 325,345 units in March 2019 as against 326,667 units in March 2018.

Finally, the BSE Sensex rose 184.78 points or 0.48% to 39,056.65, while the CNX Nifty was up by 44.05 points or 0.38% to 11,713.20.

The BSE Sensex touched a high and a low of 39,121.69 and 38,846.96, respectively and there were 18 stocks advancing against 12 stocks declining, while 1 stock remain unchanged on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.04%, while Small cap index was down by 0.18%.

The top gaining sectoral indices on the BSE were Realty up by 2.66%, Telecom up by 1.54%, Auto up by 0.94%, Utilities up by 0.75% and Power up by 0.72%, while Oil & Gas down by 0.61%, Healthcare down by 0.52%, Basic Materials down by 0.49%, Consumer Durables down by 0.46% and FMCG down by 0.44% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 8.36%, Tata Motors - DVR up by 6.17%, Bharti Airtel up by 5.08%, TCS up by 2.37% and Bajaj Finance up by 2.25%. On the flip side, Bajaj Auto down by 2.14%, Sun Pharma down by 1.92%, Vedanta down by 0.71%, Tata Steel down by 0.67% and HCL Tech. down by 0.58% were the top losers.

Meanwhile, the government has revealed Goods and Services Tax (GST) data for the month March 2019. GST collections in March came in at a record Rs 1.06 lakh crore. However, it is not enough to meet the Union government's target of Rs 12 lakh crore for the fiscal year ended March 31. March witnessed the highest ever monthly return filing since GST rollout on July 1, 2017. The collections indicate that the revenue growth has been picking up despite various rate rationalisation measures. The gross collections during FY19 fiscal totalled a little over Rs 11.77 lakh crore.

Finance Minister Arun Jaitley has said the record collections in March indicates the expansion in both manufacturing and consumption. Moreover, the monthly average of GST revenue during FY 19 is Rs 98,114 crore, 9.2 per cent higher than the previous fiscal. These figures indicate that the revenue growth has been picking up in recent months, despite various rate rationalisation measures.

Besides, the Government, which had upwardly revised fiscal deficit target to accommodate the cash-dole-out plan to farmers, was banking on its share of estimated GST collections of Rs 5.03 lakh crore out of about Rs 11.47 lakh crore in total mop-up for FY19. But, the final numbers showed gross central GST coming in at Rs 4.25 lakh crore, about Rs 78,000 crore short of what the Centre was targeting.

The CNX Nifty traded in a range of 11,729.35 and 11,655.85. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 8.62%, Bharti Airtel up by 4.46%, Eicher Motors up by 2.80%, SBI up by 2.53% and Bajaj Finance up by 2.38%. On the flip side, Zee Entertainment down by 2.81%, BPCL down by 2.42%, Bajaj Auto down by 2.32%, Britannia Inds down by 1.77% and Sun Pharma down by 1.75% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 33.30 points or 0.46% to 7,350.68, France’s CAC rose 2.18 points or 0.04% to 5,407.71 and Germany’s DAX was up by 7.40 points or 0.06% to 11,689.39.

Asian markets ended mostly higher on Tuesday as upbeat manufacturing data from China and the United States bolstered investor confidence in the global economy. Chinese shares advanced on optimism about policy easing and signs of progress in trade talks. However, the upside movement was capped by concerns surrounding Brexit after British lawmakers rejected all the options to replace Prime Minister Theresa May's divorce deal. Japanese shares ended down as investors locked in profits following two days of gains.