Markets settle at lifetime closing high on Modi euphoria

Indian equity benchmarks settled at lifetime closing high on Friday, as investors felt assured of policy stability after a decisive mandate for the Narendra Modi-led BJP in the general elections. The markets made a firm start of the day, aided by Fitch Ratings’ latest report stating that a landslide victory of the Bharatiya Janata Party (BJP) marked an easing of political uncertainty and is expected to improve business sentiment and the outlook for private investment. From a credit rating perspective, it would focus on the extent of the next government's efforts to improve India's weak fiscal finances. The street took a note of Central Board of Direct Taxes’ (CBDT) latest notification that senior citizens with a taxable income of up to Rs 5 lakh can now submit in banks and post offices Form 15H to claim exemption from Tax Deducted at Source (TDS) on interest income on deposits. Earlier, the limit for seeking TDS exemption was Rs 2.5 lakh.

Markets further gained traction to end the trading session with fabulous gains of over 1.50%, following firm European markets. Key indices were optimistic amid reports that major industry bodies have hailed the election verdict and said the transformation of India is on a fast track with several innovative mega missions under the leadership of Prime Minister Narendra Modi. Vikram Kirloskar, President of the Confederation of Indian Industry (CII) said that the decisive election results will propel India's growth pace to the next orbit and drive the transformation of the country. Meanwhile, Moody’s Investors Service in its latest report said that its credit view on the country will depend on policies of the new government. As per the trend, BJP-led National Democratic Alliance (NDA) will form the government at the Centre for the second successive term with absolute majority.

On the global front, European markets were trading in green, as Finland's retail sales increased in April from a year ago. The flash estimate from Statistics Finland showed that retail sales volume grew 3.2 percent year-on-year in April, faster than the 1.7 percent rise in March. At the same time, retail turnover advanced 4.3 percent versus 1.4 percent in the previous month. Asian markets ended mixed, amid reports that Japan's all industry activity fell further in March. The figures from the Ministry of Economy, Trade and Industry showed that the all industry activity index declined 0.4 percent month-on-month in March, following a 0.2 percent drop in February. Among components, construction industry activity increased 0.3 percent, slower than 1.5 percent rise in February.

Back home, oil industry stocks remained in focus, amid reports that India has stopped importing oil from Iran after American waivers granted to eight buyers expired early this month, becoming the latest country to comply with the US sanctions on Tehran over its nuclear programme. Further, stocks related fertiliser sector buzzed, with the rating agency ICRA in its latest report stating said that the fertiliser sector in India expects faster clearance of the overdue subsidy payments, including through 'Special Banking Arrangement' to help companies tide over their liquidity problem during the second tenure of the National Democratic Alliance (NDA) government.

Finally, the BSE Sensex gained 623.33 points or 1.61% to 39,434.72, while the CNX Nifty was up by 187.05 points or 1.60% to 11,844.10.

The BSE Sensex touched a high and a low of 39,476.97 and 38,824.26, respectively and there were 27 stocks advancing against 04 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 2.01%, while Small cap index was up by 2.42%.

The top gaining sectoral indices on the BSE were Realty up by 4.18%, Capital Goods up by 3.98%, Telecom up by 3.56%, Industrials up by 3.56% and Auto up by 2.94%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were ICICI Bank up by 5.09%, Larsen & Toubro up by 4.60%, Bharti Airtel up by 4.42%, Vedanta up by 4.20% and Tata Motors up by 4.09%. On the flip side, NTPC down by 0.54%, HCL Tech. down by 0.46%, TCS down by 0.20% and Hindustan Unilever down by 0.10% were the top losers.

Meanwhile, the ratings agency, ICRA has said negative growth in domestic air traffic was seen on account of on Jet Airways grounding. The discontinuation of operations by Jet Airways has impacted about 14 per cent of the total industry capacity. The agency mentioned the moderation in capacity, which started in February when the now-defunct Jet Airways began grounding its fleet in a staggered manner and, which eventually led to shuttering of operations around mid-last month, has also resulted in an increase of 30-40 per cent in airfares in March as compared to September last year.

It further added that this, de-growth in domestic passenger traffic, is primarily attributable to adverse impact on the industry capacity which has been hit hard due to grounding of Jet Airways aircraft starting February on account of liquidity constraints and eventual discontinuation of its operations from April 18. However, the domestic passenger traffic remained on an upswing between July 2013 and March 2019, after witnessing year-on-year de-growth in June 2013.

Meanwhile, it said that the consequent increase in airfares due to the demand-supply imbalance has impacted the industry passenger load factors (PLFs). During April all airlines except GoAir have reported a year-on-year decline in PLFs. Overall, the domestic passenger traffic growth for January-April period has been muted at 2.5 per cent, significantly lower than the 24.6 per cent growth witnessed during the year-ago period.

The CNX Nifty traded in a range of 11,859.00 and 11,658.10. There were 45 stocks advancing against 05 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 5.27%, Vedanta up by 4.48%, Tata Steel up by 4.21%, Bharti Airtel up by 4.19% and Zee Entertainment up by 4.16%. On the flip side, Tech Mahindra down by 0.85%, NTPC down by 0.27%, TCS down by 0.20%, ONGC down by 0.09% and HCL Tech down by 0.02% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 45.54 points or 0.63% to 7,276.58, France’s CAC rose 41.33 points or 0.78% to 5,322.70 and Germany’s DAX was up by 85.38 points or 0.71% to 12,037.79.

Asian markets ended mixed on Friday, even as trade worries persisted and a slump in oil prices pulled down energy stocks. US President Donald Trump said on Thursday that Washington's complaints against Huawei Technologies might be resolved within the framework of a US-China trade deal. At the same time, he called the Chinese telecommunications giant ‘very dangerous’. During a weekly briefing, Chinese Commerce Ministry spokesman Gao Feng said the Trump administration must ‘show sincerity and correct their wrong actions’ if the US wants trade talks to continue. ‘Negotiations can only continue on the basis of equality and mutual respect’, Gao said, noting that China is closely monitoring developments and preparing a necessary response. Japanese shares ended slightly lower, with a sharp fall in oil prices and fears of a technology cold war between the US and China weighing on investors' risk appetite.