Local equities continue upward momentum; Sensex surpasses 39,500 mark

Local equity markets maintained their upward momentum in the morning session, following gains in Metal, Auto and Energy stocks amid positive global sentiment. Sentiments got boosted with World Bank President David Malpass’ statement that the multi-lateral funding agency will continue with $6 billion lending target for India. As many as 97 projects are being currently executed with loan assistance from the World Bank. He suggested that further reforms and innovation will help spur growth in the country. Local investors also cheered 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. 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 were trading mostly in red. Investors monitor further developments on the US-China trade front with the two economic powerhouses working toward a deal. Back home, automobile industry stocks were trading 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.

The BSE Sensex is currently trading at 39544.71, up by 294.51 points or 0.75% after trading in a range of 39254.12 and 39548.81. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.43%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Metal up by 3.86%, Auto up by 2.91%, Energy up by 1.86%, Basic Materials up by 1.45% and Industrials was up by 1.31%, while Telecom down by 3.64% and FMCG was down by 0.13% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 13.52%, Tata Motors up by 12.57%, Tata Steel up by 7.01%, Vedanta up by 4.91% and Yes Bank was up by 4.47%. On the flip side, Bharti Airtel down by 3.39%, Kotak Mahindra Bank down by 1.08%, HDFC down by 0.74%, Hindustan Unilever down by 0.49% and Power Grid was down by 0.47% were the top losers.

Meanwhile, in a bid to help power sector by preventing around Rs 1 lakh crore of debt from turning into non-performing assets, the government is in the final leg of drafting the new subsidy scheme that will allow stressed gas-based power projects to run their plants using a mix of domestic and imported gas. The new subsidy scheme will be based on a gas auction mechanism where electricity generating units quoting least government support to offer electricity to discoms at about Rs 4.50-5 a unit using fuel being offered to them by pooling domestic gas with LNG.

The new scheme will have a buffer of Rs 18,000 crore as subsidy may be created for supplementing the need to keep power tariff lower in the event of a spike in gas prices as the new scheme will avoid committing any subsidy to power producers with gas prices remaining soft in the international market

Under gas pooling, the price of fuel could be brought down which will allow electricity tariff to fall below Rs 6 a unit. The subsidy will arise if price of gas keeps electricity tariff higher than Rs 5 a unit. Such subsidy may either be paid directly to generators or the government may evolve a direct benefit transfer type of scheme, transferring the gap directly to power users.

The CNX Nifty is currently trading at 11711.25, up by 84.10 points or 0.72% after trading in a range of 11627.35 and 11713.40. There were 35 stocks advancing against 14 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Tata Motors up by 12.83%, Tata Steel up by 7.03%, JSW Steel up by 5.31%, Vedanta up by 4.94% and Yes Bank was up by 4.57%. On the flip side, Bharti Infratel down by 5.80%, Bharti Airtel down by 3.31%, Kotak Mahindra Bank down by 1.01%, Nestle down by 0.80% and Ultratech Cement was down by 0.78% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 155.40 points or 0.58% to 26,735.86, Shanghai Composite declined 12.00 points or 0.4% to 2,968.05, Taiwan Weighted dropped 5.51 points or 0.05% to 11,309.51, Jakarta Composite lost 2.27 points or 0.04% to 6,263.11 and KOSPI was down by 0.45 points or 0.02% to 2,093.15.

On the other hand, Straits Times advanced 16.85 points or 0.53% to 3,202.38 and Nikkei 225 was up by 92.28 points or 0.4% to 22,959.55.