Bulls make comeback on Dalal Street post Diwali

Bulls rejuvenate on Dalal Street post Diwali session and markets rallied around one and a half percent on Tuesday. The investors’ mood remained up-beat throughout the day and there appeared not even an iota of profit booking, as investors continued hunt for fundamentally strong stocks. Soon after making marginal positive start, markets gained traction as traders took some encouragement with the Reserve Bank’s statement that continuing its northward surge, India’s forex kitty has swelled by $1.039 billion to a new life-time high of $440.751 billion for the week ended October 18. Some support also came with World Bank group President David Malpass’ statement that India must undertake financial reforms in three key areas like sound regulations for non-banking financial companies (NBFCs), allow private sector banks in a big way in the banking sector and deepen capital market to aide growth. Adding optimism, Central Board of Indirect Taxes and Customs (CBIC) favored extending incentives based on parameters like job creation and committed investments across the country.

Markets extended gains and settled above their crucial 39,800 (Sensex) and 11,750 (Nifty) levels with a report that Prime Minister Narendra Modi embarked on a two-day visit to Saudi Arabia to help draw investments and bolster bilateral ties, with a dozen agreements expected to be signed in sectors, including energy, Defence procurement and civil aviation. Besides, Union Steel Minister Dharmendra Pradhan said that India will spend about $1.4 trillion on its infrastructure development in the next five years. Meanwhile, urging government to probe the business model of e-commerce majors, the Confederation of All India Traders (CAIT) has said that deep discounts on products by them are causing loss of Goods and Services Tax (GST) revenue to the Centre and state governments. However, traders ignored a private report that declining for the fourth consecutive month, consumer confidence in the month of October nosedived by 3.5% tracking pessimism around jobs, economy, finances, and investment.

On the global front, Asian markets ended mostly higher, amid continued optimism for a trade deal between the US and China. European markets were trading lower as earnings proved to be a mixed bag and the British parliament rejected a plan by Prime Minister Boris Johnson to organize a snap election, adding an additional layer of uncertainty surrounding the economic outlook.

Back home, automobile stocks ended higher as India Ratings and Research (Ind-Ra) reported that that retail sales of automobile are likely to pick up with an improvement in consumer sentiment during the ongoing festive season due to recent liquidity easing measures announced by the government and on back of favourable monsoons. Stocks related to the metal industry remained in focus, as Minister of Petroleum and Natural Gas & Steel Dharmendra Pradhan said that the demand of  steel  in the country has  seen  substantial  increase  and  is  expected  to increase further in the future as India embarks to become a $5 trillion economy. On the other hand, telecom stocks remained under pressure amid uncertainty over how the firms plan to make payments under the government's definition of adjusted gross revenue (AGR), which was upheld by the Supreme Court last week.

Finally, the BSE Sensex gained 581.64 points or 1.48% to 39,831.84, while the CNX Nifty was up by 159.70 points or 1.37% to 11,786.85.

The BSE Sensex touched a high and a low of 39,917.01 and 39,254.12, respectively and there were 27 stocks advancing against 4 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index surged 1.12%, while Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Auto up by 4.25%, Metal up by 4.19%, Energy up by 1.99%, Industrials up by 1.98% and Consumer Discretionary Goods & Services was up by 1.72%, while Telecom down by 4.39% was the lone losing index on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 18.45%, Tata Motors up by 16.63%, Tata Steel up by 7.09%, Yes Bank up by 6.30% and Axis Bank up by 4.06%. On the flip side, Bharti Airtel down by 3.41%, Kotak Mahindra Bank down by 1.14%, Power Grid Corporation down by 0.64% and SBI down by 0.55% were the few losers.

Meanwhile, Urging government to probe the business model of e-commerce majors, the Confederation of All India Traders (CAIT) has said that deep discounts on products by them are causing loss of Goods and Services Tax (GST) revenue to the Centre and state governments.

The traders’ body in its a letter to Union Finance Minister Nirmala Sitharaman claimed that e-commerce companies Amazon and Flipkart and others were selling goods much below their market value thus denying the Government of its due legitimate GST revenue.

Besides, CAIT noted that under GST Act, the government has a power to determine actual market value of the products if it appears that it is under billed. Meanwhile, CAIT sent similar letters to Union Commerce Minister Piyush Goyal and finance ministers of all states.

The CNX Nifty traded in a range of 11,809.40 and 11,627.35. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 16.55%, JSW Steel up by 6.68%, Tata Steel up by 6.44%, Yes Bank up by 6.30% and Maruti Suzuki up by 4.42%. On the flip side, Bharti Infratel down by 9.02%, Bharti Airtel down by 3.30%, Ultratech Cement down by 1.55%, Kotak Mahindra Bank down by 1.21% and ZEE Entertainment down by 0.92% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 33.56 points or 0.46% to 7,297.72, France’s CAC fell 3.91 points or 0.07% to 5,726.66 and Germany’s DAX was down by 24.48 points or 0.19% to 12,917.23.

Asian markets ended mostly higher on Tuesday as investors waiting for developments in US-China trade deal. Moreover, hopes of another interest rate cut by the US Federal Reserve in the monetary policy meeting to be held on Wednesday also boosted investor sentiment. Chinese shares ended lower despite Donald Trump's statement regarding prospects for a trade deal with China being agreed ahead of expectations. Meanwhile, Japanese shares ended higher following Trump’s statement that he hopes to sign a trade deal with China's President at a summit in Chile in the upcoming month.