Bulls roar back on Dalal Street

Bulls roared back over Dalal Street on Thursday, with Sensex & Nifty gaining over 630 & 175 points, respectively, after reports said the government was looking to roll-back the recently imposed higher tax on the foreign portfolio investors (FPIs). After a firm start of the day, key indices remained in green for the most part of the session, as the India Meteorological Department showed that India received 28% more rainfall than the 50-year average in the week to August 7, easing concerns of drought. Monsoon rains are crucial for farm output & economic growth, as agriculture forms about 15% of India's $2.5-trillion economy. The street overlooked Reserve Bank of India’s (RBI) report that consumer confidence declined in July as reflected in the current situation index; the future expectations index fell by about 4 points.

Markets extended gains in the last leg of the trade, as RBI announced two key measures to help non-bank financial companies (NBFCs) which are facing a severe liquidity squeeze. The first is harmonisation of single counterparty exposure limit for banks' exposure to single NBFCs with the general single counterparty exposure limit. The central bank has decided to raise a bank's exposure limit to a single NBFC to 20 per cent of tier-I capital of the bank. The second initiative deals with credit to the priority sector. The street also took a note of EEPC India chairman, Ravi Sehgal’s statement that the central bank should ensure easy credit disbursal to exporters, especially in the MSME sector.

On the global front, European markets were trading in green, as Finland's trade balance registered a surplus in June versus a deficit a year ago. The data from the Finnish Customs showed that trade balance showed a surplus of EUR 195 million in June versus a EUR 175 million deficit in the same month last year. Asian markets ended in green, after China's exports rose in July, defying expectations for further decline, but the improvement is unlikely to last as the country's trade spat with the US intensified significantly in recent weeks. Exports grew 3.3 percent year-on-year after a 1.3 percent fall in June.

Back home, automobile industry stocks ended higher, amid reports that India's auto industry demanded tax cuts and easier access to finance for dealers and buyers at a meeting with Indian government officials to discuss the sector's woes, in an effort to revive sales that have slumped. Further, stocks related to the power sector remained in focus, as Central Electricity Authority (CEA) data showed that fresh capacity addition in power has started on a sombre note. Out of the 1820 Mw envisaged to be added during April-June of this fiscal year, only 45 Mw has been added in thermal power generation.

Finally, the BSE Sensex gained 636.86 points or 1.74% to 37,327.36, while the CNX Nifty was up by 176.95 points or 1.63% to 11,032.45.

The BSE Sensex touched a high and a low of 37,405.48 and 36,655.41, respectively and there were 28 stocks advancing against 03 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.42%, while Small cap index was up by 0.74%.

The top gaining sectoral indices on the BSE were Energy up by 3.15%, Auto up by 2.77%, IT up by 1.98%, TECK up by 1.94% and Oil & Gas up by 1.81%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 6.55%, HCL Tech. up by 6.43%, Tata Motors up by 5.58%, Mahindra & Mahindra up by 4.06% and Bajaj Auto up by 3.99%. On the flip side, Tata Steel down by 3.77%, Indusind Bank down by 0.81% and Axis Bank down by 0.01% were the top losers.

Meanwhile, Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf has stated that the removal of some provisions of Article 370 will not only bring in huge trade and business opportunities for both Jammu & Kashmir (J&K) and Ladakh regions but will also help get the troubled region to stand on its feet.

Saraf has stated that this bold step will help to increase trade in sectors like carpets, handicrafts, sports goods, horticulture and food processing. He said that strong efforts from the government, trade and industry including handholding of local businesses is the need of the hour today to further help to push its growth rate and create new jobs and livelihoods in the region.

FIEO President further said that opportunities exist in the other key sectors also including pharmaceuticals, information technology/information technology-enabled services, electronics and leather.

The CNX Nifty traded in a range of 11,058.05 and 10,842.95. There were 46 stocks advancing against 04 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 6.67%, Tata Motors up by 5.62%, JSW Steel up by 4.99%, Reliance Industries up by 4.26% and BPCL up by 3.93%. On the flip side, Tata Steel down by 4.03%, Cipla down by 2.78%, Ultratech Cement down by 2.28% and Indiabulls Housing Finance down by 0.99% were the few losers.

European markets were trading in green; UK’s FTSE 100 increased 10.94 points or 0.15% to 7,209.64, France’s CAC rose 60.30 points or 1.14% to 5,326.81 and Germany’s DAX was up by 87.58 points or 0.75% to 11,737.73.

Asian markets ended mostly higher on Thursday after China reported stronger-than-expected rebound in exports in July despite a protracted trade war with the United States. China's central bank fixed the Yuan weaker above 7 per dollar, the first time in a decade, but it was not as weak as many had expected. On the other hand, Oil prices jumped after seeing sharp declines the previous day on expectations that producers may reduce supply to support the market. Chinese shares ended higher after data showed Chinese exports rose 3.3 percent in July, compared to forecasts for a 2 percent drop, while imports fell less than the expected. Further, Japanese shares ended modestly higher and the yen's appreciation against the dollar slowed after Japan approved its first shipment of restricted goods to South Korea.