Bourses settle higher for third straight session

Indian equity benchmarks settled higher for third straight session on Tuesday, despite mixed cues from global markets. The start of the day was firm, aided by Minister of State for Finance Anurag Thakur’s statement that Indian economy is structurally and fundamentally very strong and the current slowdown, which is cyclical in nature, would not affect it much. He also exuded confidence that India would achieve the target of becoming $5 trillion economy by 2024-25. Market participants also took a note of the Finance Ministry’s statement that loans worth Rs 81,781 crore were disbursed during the nine-day outreach programme or loan mela organized by banks that began on October 1.

Bourses extended their gains in the second half of trading session, taking support with Commerce and Industry Minister Piyush Goyal’s statement that the recent economic slowdown is a cyclic structural adjustment, and it is the right time to invest in India before growth bounces back. The street overlooked report that the Consumer Price Index (CPI) based inflation jumped to a 14-month high of 3.99% in September as compared to 3.28% in August and 3.70% in the September last year, rising for the second straight month, due to costlier vegetables and pulses. The previous high was 4.17% in July 2018. Though, it still remained within the Reserve Bank of India’s target range of 4%, with deviation of 2% on either side.

On the global front, European markets were trading mostly in green, despite the UK unemployment increased and employment declined in three months to August. The data from the Office for National Statistics showed that the number of people in work fell 56,000 to 32.69 million and the level of unemployment increased by 22,000 to 1.31 million in three months to August. Asian markets ended mixed, as Japan's industrial production declined in August as initially estimated. The final data from the Ministry of Economy, Trade and Industry showed that industrial production dropped 1.2 percent month-on-month in August, reversing a 1.3 percent rise in July. That was in line with the preliminary estimate.

Back home, healthcare stocks ended higher after ICRA said that Indian healthcare sector is on a recovery path after past two years of underperformance that was mainly due to the cap on prices of stents and knee implants by the National Pharmaceutical Pricing Authority, adverse impact of rollout of GST on profitability and strict regulatory action taken by multiple states. Further, road & infrastructure industry stocks remained in watch as India Ratings and Research in its latest report revised the outlook for road sector to stable-to-negative from stable for the remainder of FY20, amid several factors like subdued funding climate, economic growth-led deceleration in traffic volumes and uncertainty on the bidding model.

Finally, the BSE Sensex gained 291.62 points or 0.76% to 38,506.09, while the CNX Nifty was up by 87.15 points or 0.77% to 11,428.30.

The BSE Sensex touched a high and a low of 38,635.19 and 38,238.27, respectively and there were 25 stocks advancing against 06 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index rose 0.72%, while Small cap index was down by 0.11%.

The top gaining sectoral indices on the BSE were Auto up by 2.36%, Metal up by 1.56%, Bankex up by 1.31%, PSU up by 1.24% and Consumer Disc up by 1.24%, while Telecom down by 2.15%, TECK down by 0.80% and IT down by 0.66% were the only losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 3.79%, Mahindra & Mahindra up by 2.83%, ONGC up by 2.63%, Hero MotoCorp up by 2.56% and Maruti Suzuki up by 2.47%. On the flip side, Bharti Airtel down by 2.53%, Infosys down by 2.27%, Tata Motors down by 0.67%, HCL Tech. down by 0.27% and Tech Mahindra down by 0.07% were the top losers.

Meanwhile, Oil Minister Dharmendra Pradhan has urged Finance Minister Nirmala Sitharaman for bringing jet fuel and natural gas under the ambit of Goods and Services Tax (GST) regime to reduce the multiplicity of taxes and improve the business climate. He said ‘I make a strong appeal to Finance Minister to take this up with the GST Council and at least make a beginning by including natural gas and ATF in the GST.’ He said given the complexity of the petroleum sector and the revenue dependence of state governments in this sector, petroleum products-crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF)-have been kept outside the purview of GST regime when it was introduced on July 01, 2017.

The Minister has stated that there has been continuous demand from the petroleum industry for the inclusion of petroleum products under the GST regime. He felt that including ATF and natural gas will not just help companies set off tax that they paid on input but will also bring about uniformity in taxation on the fuels in the country. He said ATF accounts for almost half of the cost of an airline and rates vary from state to state depending on local VAT. He added that a uniform GST would also push the usage of environment-friendly natural gas whose share in the energy basket the government wants to increase to 15 percent by 2030 from current 6.2 percent.

Pradhan further said he was confident that GST Council will take a decision on the issue at the appropriate time. He said under the existing structure, these items attract the Centre's excise duty and a state's value-added tax (VAT). Both these and all other levies will get subsumed under GST if they are brought under its ambit. He noted that the decision on their inclusion depends on the financial position of states as revenues from these five petroleum products constitute a substantial chunk of state government finances. He added that barring a few, most of the states are incurring revenue shortfall as GST subsumed a dozen of taxes, introducing the single levy, in a bid to simplify taxation system and remove the cascading effect of 'tax on tax' in the country.

The CNX Nifty traded in a range of 11,462.35 and 11,342.10. There were 41 stocks advancing against 09 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 4.69%, Vedanta up by 4.03%, Zee Entertainment up by 3.17%, ONGC up by 2.70% and Hero MotoCorp up by 2.64%. On the flip side, Bharti Airtel down by 2.83%, Infosys down by 2.18%, Bharti Infratel down by 1.27%, Tata Motors down by 1.02% and JSW Steel down by 0.88% were the top losers.

European markets were trading mostly in green; France’s CAC increased 30.26 points or 0.54% to 5,673.34 and Germany’s DAX rose 62.24 points or 0.5% to 12,548.80, while UK’s FTSE 100 was down by 9.89 points or 0.14% to 7,203.56.

Asian markets ended mixed on Tuesday as investors adopted a cautious stance ahead of earnings results from the big US banks this week. Investors also remained cautious over the partial US-China trade deal announced last week as well as renewed Brexit uncertainty dented sentiment. Chinese shares ended down after the reports showed that China inflation accelerated to the highest since 2013 on food prices, while factory gate prices eased further in September as trade disputes with the US and subdued demand weighed on the manufacturing sector. Consumer price inflation rose more-than-expected to 3 percent in September from 2.8 percent in August. Producer prices declined for the third straight month in September. Prices decreased 1.2 percent annually after falling 0.8 percent in August. Meanwhile, Japanese shares ended higher as traders returned to their desks after a long holiday weekend.