Local equities continue upward rally; Sensex above 37,600 mark

Local equity markets continued their upward rally in morning session, as investors continued cheering the prospects of a possible capital market booster package from the government. The BSE Sensex and broader Nifty eked out around one percent gain after intense buying thronged the markets. Sentiment on the street improved on India Ratings’ report that the budgeted Rs 70,000-crore capital infusion in public sector banks (PSBs) may translate into limited credit growth at these lenders, as much of it goes towards meeting provisioning and regulatory requirements. Market men took note of a report that the finance ministry has asked its commerce counterpart to assess the revenue implication of the proposed mega free-trade agreement Regional Comprehensive Economic Partnership (RCEP). Local investors also cheered with a private report stating that Private equity (PE) funds are planning to earmark as much as $100 billion to invest in Indian companies, as the latter struggle to deleverage and infuse fresh equity into their business. Sentiment also got boost after the private report that after an unconventional 35 basis points reduction in the repo rate, the Reserve Bank is likely to go in for another 25 basis points rate reduction in the December quarter amid growing concerns over growth.

On the global front, Asian markets were trading mixed, after Japan’s GDP grew, but so did China’s inflation. New data showed Japan’s economy grew at a faster-than-expected pace in the June-ended second quarter. Back home, Trade Promotion Council of India (TPCI) stated that Pakistan’s decision to suspend bilateral trade ties with India does not have any economic prudence and it would impact the neighbouring country more.

The BSE Sensex is currently trading at 37681.53, up by 354.17 points or 0.95% after trading in a range of 37406.26 and 37687.38. There were 23 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.12%, while Small cap index was up by 1.27%.

The top gaining sectoral indices on the BSE were Basic Materials up by 2.17%, Realty up by 1.42%, Metal up by 1.41%, Consumer Durables up by 1.30% and Capital Goods was up by 1.19%, while Telecom down by 0.40%, TECK down by 0.09% and IT was down by 0.02% were the few losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 3.64%, HDFC up by 2.24%, HDFC Bank up by 1.89%, Larsen & Toubro up by 1.66% and Maruti Suzuki was up by 1.52%. On the flip side, Yes Bank down by 1.85%, Bharti Airtel down by 1.36%, Tata Motors down by 0.85%, ITC down by 0.74% and TCS was down by 0.53% were the top losers.

Meanwhile, in a view to encourage domestic manufacturing, Power Minister Raj Kumar has said India would increase import duty on solar equipment down the value chain in the coming years. Allaying fears that any hike in import duty may increase solar energy tariff bidding rate, the minister assured that it will not impact solar energy bidding process in India. Besides, he also said that a power storage policy will be unveiled soon. The policy will provide tax incentives, especially for solar equipment manufacturing in India. The government is encouraging storage segment to push renewables as well as electric mobility.

In July last year, India had imposed a safeguard duty on imports of solar cells from China and Malaysia for two years to protect domestic players from steep rise in inbound shipments of the product. India had imposed 25% safeguard duty on solar cells for July 30, 2018 to July 29, 2019 period. Now, it has come down to 20% for July 30, 2019 to January 29, 2020. It will further come down to 15% during January 30, 2020 to July 29, 2020.

There has been a significant increase in imports of solar cells in absolute terms. Imports of cells jumped to 9,790 MW in 2017-18 from 1,275 MW in 2014-15. India produced 842 MW solar cells in 2017-18. Certain domestic players had claimed that on account of the surge in imports of the cells, many domestic producers have kept their production facilities almost idle and the heavy losses have crippled the domestic industry.

The CNX Nifty is currently trading at 11134.20, up by 101.75 points or 0.92% after trading in a range of 11062.80 and 11143.15. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 8.56%, Vedanta up by 3.60%, Grasim Industries up by 3.30%, UPL up by 3.01% and Ultratech Cement was up by 2.93%. On the flip side, Yes Bank down by 1.91%, Bharti Airtel down by 1.46%, Indian Oil Corporation down by 0.99%, ITC down by 0.91% and Tata Motors was down by 0.77% were the top losers.

Asian markets were trading mixed; Jakarta Composite soared 6.12 points or 0.1% to 6,280.79, KOSPI rose 20.64 points or 1.07% to 1,941.25 and Nikkei 225 was up by 124.99 points or 0.61% to 20,718.34. On the other hand, Hang Seng decreased 14.09 points or 0.05% to 26,106.68 and Shanghai Composite was down by 10.46 points or 0.37% to 2,784.09.