Local equities add gains; Sensex crosses 40k mark

Local equity markets added gains to continue firm trade in the morning session on account of buying in front line counters. Most of the sectoral indices were trading in green with Telecom and Oil & Gas as the top gaining indices trading up by over 1.50%. Traders turned optimistic with a report that an inter-ministerial group discussions on the possibility of further easing foreign direct investment (FDI) norms in different sectors with a view to attract overseas investors. Sentiments remain energized with Prime Minister Narendra Modi’s statement as he has invited Saudi companies to invest in India’s energy space saying that the government has set a target of $100 billion investment in the sector. He added India offers a huge investment opportunity in the infrastructure sector also as he emphasised that the country aims to be a $5 trillion economy in the next five years. Local investors also cheered with a report that the finance ministry and regulators are reviewing the possibility of scrapping the dividend distribution tax (DDT). It is also considering rationalisation of the long-term capital gains (LTCG) taxation structure by classifying three asset classes against six at present.

On the global front, Asian markets were trading mixed, as the prospect of an interest rate cut by the US Federal Reserve was overshadowed by worries that a China-US first-stage trade deal could be delayed. Back on the domestic turf, a report state that India ranks 102 out of 117 countries in the Global Hunger Index (GHI) 2019, much below to its South Asian neighbours such as Nepal, Bangladesh, Pakistan, even when tonnes of food grains are stored in the government godowns across the country.

The BSE Sensex is currently trading at 40038.71, up by 206.87 points or 0.52% after trading in a range of 39805.11 and 40100.26. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.67%, while Small cap index was up by 0.63%.

The top gaining sectoral indices on the BSE were Telecom up by 2.13%, Oil & Gas up by 1.62%, PSU up by 1.28%, Capital Goods up by 1.24% and Industrials was up by 1.01%, while Consumer Durables down by 0.36%, Auto down by 0.23% and Metal was down by 0.16% were the few losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.06%, Bharti Airtel up by 1.92%, HDFC Bank up by 1.55%, ITC up by 1.52% and SBI was up by 1.25%. On the flip side, Tata Motors down by 0.99%, ICICI Bank down by 0.87%, Bajaj Finance down by 0.45%, Tata Motors - DVR down by 0.44% and Mahindra & Mahindra was down by 0.43% were the top losers.

Meanwhile, the rating agency ICRA in its latest report has said that domestic demand for the mining and construction equipment sector fell sharply by 16-17 percent in the January-August period of calendar year 2019 (CY19), on the back of tight liquidity conditions in the market, delayed payment to contractors along with reduction in the government expenditure in infrastructure projects.

The report said while recovery in demand is likely during CY20 to about 5-10 percent, the October 2019 (post which production of BS-III vehicles are not allowed) transition to the next emission norm is a potential headwind given the changes in the equipment and its substantial cost implications. It noted that barring few select top-north pockets, overall demand has fallen significantly despite sizable discounting in the market. It added that immediate term demand outlook in the dealer community is also negative, although few expect a recovery in the fourth quarter of 2019.

ICRA further stated that lack of liquidity on account of delayed payment by contractors coupled with slowdown in project execution is a cause for concern. It also said equipment utilization in few markets is down almost 50 percent. It added that consequently, delinquencies, which were holding largely steady for the construction equipment asset class until Q1 of fiscal year 2020 (FY2020), are also expected to have increased in the past two months.

The CNX Nifty is currently trading at 11842.85, up by 56.00 points or 0.48% after trading in a range of 11784.45 and 11883.95. There were 29 stocks advancing against 20 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Zee Entertainment up by 2.92%, Bharti Infratel up by 2.87%, Indian Oil Corporation up by 2.42%, Infosys up by 2.05% and Bharti Airtel was up by 1.82%. On the flip side, Cipla down by 1.62%, UPL down by 1.39%, Coal India down by 1.36%, Tata Motors down by 1.01% and Eicher Motors was down by 0.87% were the top losers.

Asian markets were trading mixed, Nikkei 225 slipped 108.90 points or 0.47% to 22,865.23, Hang Seng decreased 72.87 points or 0.27% to 26,713.89, KOSPI fell 13.41 points or 0.64% to 2,079.28 and Shanghai Composite was down by 12.93 points or 0.44% to 2,941.25.

On the other side, Straits Times advanced 10.49 points or 0.33% to 3,207.53, Taiwan Weighted strengthened 14.62 points or 0.13% to 11,348.49 and Jakarta Composite was up by 15.81 points or 0.25% to 6,296.95.