Last hour rally helps markets to end near day’s high

Last hour rally helped Indian equity markets to end Thursday’s session near their intraday high points, with Sensex & Nifty reclaiming their crucial psychological levels of 39,000 and 11,550, respectively. After a cautious start, indices remained flat for the first half of the session, impacted by a report that the Securities and Exchange Board of India is planning to further tighten rules for participatory notes (P-notes), offshore derivative instruments issued by brokers to foreign investors not registered in the country. Sentiments also got hit, after latest data of Reserve Bank of India showed that credit growth at Indian banks has dropped to its lowest level in nearly two years, as slowing domestic consumption weighs on demand.

However, key benchmarks gained traction in the second half of the trading session, tracking firm European markets. Market participants took support with Union Finance Minister Nirmala Sitharaman’s statement that Prime Minister Narendra Modi’s vision of making India a $5-trillion economy and a global economic powerhouse by 2024-25 is ‘challenging’ but ‘realisable’ and underlined that more reforms are on the anvil before the end of the fiscal year. Traders also got comfort with a private report stating that the digital payment system that has been developed in India not only allows big tech companies to participate in it but also has convenience, ease of use, low cost and financial inclusion.

On the global front, European markets were trading in green, as the euro area trade surplus increased in August on falling imports. The data from Eurostat revealed that the trade surplus rose to a seasonally adjusted EUR 20.3 billion in August from EUR 17.5 billion in July. Exports grew 0.4 percent from the previous month, while imports declined 1.2 percent in August. Asian markets ended mostly in red, after Singapore's non-oil domestic exports continued to decline in September albeit at a slower pace. The data from Enterprise Singapore showed that non-oil domestic exports decreased 8.1 percent year-on-year in September, following a 9 percent fall in August. This was also slower than the expected 7.2 percent drop.

Back home, realty sector stocks ended higher, despite report that the real estate market sentiment index has declined to the level seen during demonetisation and is expected to remain pessimistic for next six months, despite several measures taken by the government and RBI to boost demand in the sector. Further, stocks related to telecom industry remained in focus, as Telecom Secretary Anshu Prakash said that the Telecom Department is trying to get more spectrum free in the 3.3-3.6 Ghz band for 5G services, amid concerns over the limited availability of spectrum in the mid frequency bands marked for 5G services. Prakash said the government is looking at all aspects to make spectrum auction suitable for industry.

Finally, the BSE Sensex gained 453.07 points or 1.17% to 39,052.06, while the CNX Nifty was up by 122.35 points or 1.07% to 11,586.35.

The BSE Sensex touched a high and a low of 39,104.69 and 38,557.43, respectively and there were 22 stocks advancing against 09 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.77%, while Small cap index was up by 0.89%.

The top gaining sectoral indices on the BSE were Auto up by 2.93%, Consumer Disc up by 1.82%, Bankex up by 1.59%, Energy up by 1.34% and PSU up by 1.34%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Yes Bank up by 15.19%, Tata Motors - DVR up by 10.72%, Tata Motors up by 9.82%, Indusind Bank up by 5.13% and SBI up by 3.73%. On the flip side, HCL Tech. down by 1.04%, Vedanta down by 1.04%, TCS down by 0.74%, Power Grid down by 0.50% and Kotak Mahindra Bank down by 0.31% were the top losers.

Meanwhile, stressing that the fundamentals of Indian economy are ‘very very strong’, Chief Economic Advisor (CEA) K V Subramanian has called upon the industry to start making investments. He noted that fundamentals of the economy have not changed and it would be back on the 7-8 percent growth path. On more than Rs 40,000 crore of dues pending to small companies, he nudged large companies to ensure timely payment to the Micro, Small & Medium Enterprises (MSME) sector as small players are dependent on cash flows.

The CEA further said the slowdown in the economy is due to a decline in investment, which is a key driver. He also said corporates must recognize that in a slowdown labour is available cheaper and so it is the time to make investments and added that investment must be made from a long-term perspective. He stated that the government has been at its toes addressing various aspects of the economy.

In October 2019, the Reserve Bank of India (RBI) sharply reduced India’s GDP growth projection to 6.1% for 2019-20 from 6.9% estimated in the August credit policy. The central bank’s estimates come in the wake of GDP growth plunged to 5% in the first quarter of 2019-20, touching a six-year low, on a massive slowdown in consumption and private sector investments.

The CNX Nifty traded in a range of 11,599.10 and 11,439.65. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 15.47%, Tata Motors up by 13.27%, Eicher Motors up by 7.96%, Indusind Bank up by 5.14% and Bajaj-Auto up by 3.78%. On the flip side, HCL Technologies  down by 1.06%, Vedanta down by 0.97%, Grasim Industries down by 0.73%, Ultratech Cement down by 0.73% and Bharti Infratel down by 0.58% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 37.91 points or 0.53% to 7,205.86, France’s CAC rose 28.46 points or 0.5% to 5,725.36 and Germany’s DAX was up by 118.16 points or 0.93% to 12,788.27.

Asian markets ended mostly lower on Thursday as final breakthrough on Brexit deal failed to emerge ahead of European Union leaders’ two-day summit in Brussels starting today. Japanese shares ended down as investors awaited more clarity on US-China trade talks and Brexit negotiations. Meanwhile, Chinese shares ended on a flat note as investors gave muted reaction to the Hong Kong protests and reports suggesting that China would remove business restrictions on foreign banks, brokerages and fund management firms. Though, Hong Kong shares led gains after the city’s leader Carrie Lam announced on Wednesday measures to ease a housing shortage and calm anti-government protests.