Post Session: Quick Review

Monday turned out to be a fabulous day of trade for Indian equity benchmarks, where frontline gauges garnered gains of over two percent, after the government rolled back the enhanced surcharge on foreign portfolio investors, and unveiled a slew of measures to boost the economy. With that, key indices took winning streak to second straight session. Domestic stock markets started the week on a positive note, as traders took encouragement with Finance Minister Nirmala Sitharaman’s statement that the India's Gross Domestic Product (GDP) continues to grow at a faster pace than the global economy and any other major economy. However, markets erased all gains and traded with mild losses, as market-men got anxious on report that Moody's Investors Service revised downwards India's GDP growth forecast for the current year to 6.2%, saying the economy remains sluggish due to a combination of factors such as weak hiring, distress among rural households and tighter financial conditions.

But, selling was short-lived as markets regained momentum in noon trade, taking support from industry body CII’s statement that the multi-sectoral and multi-dimensional policy stimulus announced last week will have significant impact, imparting stability and underpinning a new growth impetus for India. Key indices continued their rally mood in late trade, as traders also found solace with the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that the RBI will continue to unlock entrepreneurial energies and set the country firmly on track to become $5 trillion economy in the next five years. Meanwhile, the government is likely to soon consider a proposal of relaxing rules for complying with the mandatory 30% local sourcing norms by foreign single brand retailers.

On the global front, Asian markets ended lower on Monday, as the trade war between the US and China heated up. President Donald Trump raised tensions by announcing he would raise tariffs on $250 billion of Chinese goods to 30% from 25% starting October 1. European markets were trading in green. Back home, auto stocks were in focus as the government announced several relief measures including deferring one-time registration fee, lifting a ban on the purchase of petrol/diesel vehicles by its departments and allowing higher depreciation, but it remained non-committal on the demand for a reduction in GST rates. In a bid to help clear rising inventory of BS-IV emission compliant vehicles, it said such vehicles purchased till March 31, 2020 will be allowed to ply till the validity of their registration.

The BSE Sensex ended at 37487.85, up by 786.69 points or 2.14% after trading in a range of 36492.65 and 37544.48. There were 22 stocks advancing against 9 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 1.59%, while Small cap index was up by 1.69%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 3.75%, Bankex up by 3.59%, Capital Goods up by 2.90%, Industrials up by 2.41% and PSU up by 2.12%, while Metal down by 1.17% was the lone losing index on BSE. (Provisional)

The top gainers on the Sensex were Yes Bank up by 5.49%, HDFC up by 5.21%, Bajaj Finance up by 4.81%, ICICI Bank up by 4.37% and HDFC Bank up by 4.25%. (Provisional)

On the flip side, Tata Steel down by 2.00%, Vedanta down by 1.93%, Sun Pharma down by 1.91%, Hero MotoCorp down by 1.90% and Reliance Industries down by 0.88% were the top losers. (Provisional)

Meanwhile, amid doubts over the economy and government's growth agenda, Finance Minister Nirmala Sitharaman has said the India's Gross Domestic Product (GDP) continues to grow at a faster pace than the global economy and any other major economy. She said reform is a continuous process for her government and it tops the agenda. Global GDP growth may be revised downwards from the current estimate of 3.2 per cent, she said adding that globally the demand was going to be weak. But, she said the Indian economy was growing faster than the global average and all other major economies.

In order to revive growth momentum, Finance Minister said the government has announced a raft of measures, including rollback of enhanced super-rich tax on foreign and domestic equity investors imposed in the Budget, exemption of startups from 'angel tax', a package to address distress in the auto sector and upfront infusion of Rs 70,000 crore to public sector banks. Also, it said Goods and Services Tax (GST) filing will be simplified further to meet the GSTN to remove further glitches in the system. All pending GST refunds due to MSMEs till now shall be paid within 30 days. In future, the GST refunds to MSMEs will be paid within 60 days. The government also increased in NHB funding from Rs 20,000 crore to Rs 30,000 crore. NBFCs will be now be permitted to use Aadhar based KYC of bank for their customers.

With an aim to revive the auto industry, Sitharaman said the government is lifting the ban on purchase of new vehicles by government departments. So far, the government departments were banned from buying vehicles. They will now be actively told to replace their old ones. The government has also raised the rate of depreciation on all vehicles, irrespective of their type, and acquired from now till March 2020, by 15% bringing the total depreciation to 30%. Next, the proposal to levy a one-time registration fee on vehicles and required to be paid upfront has been deferred till June 2020. She said BS4 compliant vehicles purchased till 31st March 2020 will remain operational for the entire period of registration.

The CNX Nifty ended at 11059.40, up by 230.05 points or 2.12% after trading in a range of 10756.55 and 11070.30. There were 38 stocks advancing against 12 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports &SEZ up by 5.57%, Yes Bank up by 5.49%, HDFC up by 5.10%, Bajaj Finance up by 4.98% and Ultratech Cement up by 4.77%. (Provisional)

On the flip side, JSW Steel down by 3.08%, Tata Steel down by 2.09%, Sun Pharma down by 1.92%, Hero MotoCorp down by 1.90% and Vedanta down by 1.86% were the top losers. (Provisional)

European markets were trading in green; France’s CAC increased 36.89 points or 0.69% to 5,363.76 and Germany’s DAX was up by 37.71 points or 0.32% to 11,649.22.

Asian markets ended lower on Monday following an escalation of the US-China trade war over the weekend sapped investors' appetite for risk, shrugging off a dovish speech by Fed chief Jerome Powell at the Jackson Hole Economic Policy Symposium. On Friday Trump announced an additional duty on some $550 billion of targeted Chinese goods after China unveiled retaliatory tariffs on $75 billion worth of American products. Japanese shares ended lower as the yen surged to its highest levels since January 2019 following fresh escalation of the US-China trade war. Hong Kong shares ended down on mounting worries over violence during anti-government protests in the city added to the heavy selling pressure. Furthermore, Chinese shares declined as its currency, yuan plunged to an 11-year low as investors worried about the impact of the new US tariffs on China's economic growth.