Sensex, Nifty extend gains to end higher for second straight day

Extending previous session’s strong gains, Indian equity indices closed the Friday’s session on a positive note. Markets made an optimistic start of the day, amid reports that the government is likely to withdraw higher surcharge on foreign portfolio investors (FPIs). In this regard, Finance minister Nirmala Sitharaman will meet market participants, including senior officials of foreign portfolio investors and mutual funds, later in the day to ascertain views on current issues relating to financial markets. Some support also came after India Inc said the government has assured to take action soon to revive the industry and push economic growth, which is showing signs of a slowdown. Finance Minister Nirmala Sitharaman & ministry officials met captains of the industry to deliberate upon the issues about the economy and sagging industrial growth. Sentiments remained positive, as Agriculture Minister Narendra Singh Tomar said that the deficit in southwest monsoon has narrowed and the sowing of summer (Kharif) crops is progressing well across the country.

Firm trade persisted during the whole day, supported by report that the Confederation of All India Traders (CAIT) launched an initiative ‘Digi Vyapari-Safal Vyapari’, to accelerate acceptance of digital payments among merchants across the country. For this initiative, CAIT partnered with HDFC Bank, Mastercard, Common Service Centres (CSCs) of Ministry of Electronics and Information Technology (Meity) and Global Linkers. The street paid no heed towards Ind-Ra’s latest report stating that the huge Rs 3 trillion capital infusion by the government into Public Sector Banks (PSBs) between FY14 and FY19 has helped them cut losses but has failed to contribute meaningfully to credit growth.

On the global front, European markets were trading in the red terrain, as the UK economy contracted unexpectedly in the second quarter. The first estimate from the Office for National Statistics showed that gross domestic product fell 0.2 percent sequentially, reversing first quarter's 0.5 percent growth. GDP was forecast to remain flat. Asian markets ended mixed, even though Japan's gross domestic product gained a seasonally adjusted 0.4 percent on quarter in the second quarter of 2019. That beat expectations for an increase of 0.1 percent following the upwardly revised 0.7 percent gain in the previous three months (originally 0.6 percent).

Back home, auto stocks remained in focus, as Society of Indian Automobile Manufacturers (SIAM) said the need for an immediate reduction in goods and services (GST) rates has been agreed unanimously amongst all members of the automobile manufacturers, including the two-wheeler original equipment manufacturers (OEMs). Airlines stocks also remained in watch, after International Air Transport Association (IATA) said that India's domestic air passenger traffic grew 7.9 percent in June 2019 compared to the year-ago period. It also indicated that the average demand for domestic travel across seven major aviation markets climbed 4.4 percent in June as compared to June 2018.

Finally, the BSE Sensex gained 254.55 points or 0.68% to 37,581.91, while the CNX Nifty was up by 77.20 points or 0.70% to 11,109.65.

The BSE Sensex touched a high and a low of 37,807.55 and 37,406.26, respectively and there were 16 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.77%, while Small cap index was up by 1.00%.

The top gaining sectoral indices on the BSE were Auto up by 1.99%, Consumer Durables up by 1.39%, Consumer Disc up by 1.33%, Bankex up by 0.97% and Realty up by 0.97%, while Metal down by 0.83%, PSU down by 0.45%, TECK down by 0.36%, Telecom down by 0.34% and IT down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.36%, Bajaj Finance up by 2.46%, Vedanta up by 2.17%, HDFC Bank up by 2.07% and Hindustan Unilever up by 2.03%. On the flip side, Yes Bank down by 7.91%, Tech Mahindra down by 2.50%, Tata Motors down by 1.53%, Tata Steel down by 1.37% and ITC down by 1.36% 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 traded in a range of 11,181.45 and 11,062.80. There were 27 stocks advancing against 22 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 14.77%, Eicher Motors up by 4.69%, Titan up by 3.45%, Maruti Suzuki up by 3.35% and Bajaj Finserv up by 2.79%. On the flip side, Yes Bank down by 7.85%, Cipla down by 3.57%, Tech Mahindra down by 2.53%, Hindalco down by 2.24% and Coal India down by 2.15% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 24.24 points or 0.33% to 7,261.66, France’s CAC fell 48.25 points or 0.9% to 5,339.71 and Germany’s DAX was down by 114.04 points or 0.96% to 11,731.37.

Asian markets ended mixed on Friday as investors digested key data from China and Japan, and on renewed concerns about the US-China trade dispute after a report that the White House is delaying a decision on allowing US companies to do business with China’s Huawei Technologies. Chinese shares ended down after the release of mixed inflation data. Reports showed Consumer prices in China rose an annual 2.8 percent in July, slightly higher than expectations for 2.7 percent. On a monthly basis, consumer prices were up 0.4 percent after easing 0.1 percent in the previous month. Producer prices sank 0.3 percent year-on-year, beneath expectations for a flat reading that would have been unchanged from the previous month. Meanwhile, Japanese shares ended higher after data showed its economy grew at a faster than expected pace in the June-ended second quarter. Japan's GDP grew 0.4 percent sequentially in the second quarter of 2019, which beats expectations for an increase of 0.1 percent following the upwardly revised 0.7 percent gain in the previous three months. On an annualized basis, GDP gained 1.8 percent - again exceeding expectations for an increase of 0.5 percent following the upwardly revised 2.8 percent gain in the three months prior.