Bourses end at fresh record closing highs on Wednesday

Indian equity bourses ended Wednesday’s session at fresh record closing highs. After a fabulous start, indices remained bullish, aided with Commerce & Industry Piyush Goyal’s statement that India's service sector can help achieve the Central government’s target of $5 trillion GDP. He said the service sector has the potential to be the largest job creators in the country & over the next five years, it has the potential to contribute $3 trillion out of the $5 trillion GDP target set by the government. However, in noon deals, some of gains got trimmed, as Moody's showed that Indian states face difficulties in reducing deficits, constraining the country's ability to meet medium-term fiscal consolidation goals as economic growth slows.

But, in the last leg of the trade, key bourses gained traction to reach near their intraday high points, tracking firm cues from global markets. Domestic sentiments remained positive, amid a report stating that net investment of equity and debt reported by foreign portfolio investors (FPIs) stayed bullish with net buying logged at Rs 4,677.75 crore from Indian equities. Market participants also remained encouraged with another private report indicating that the Reserve Bank of India (RBI) is expected to cut interest rates in its December bi-monthly monetary policy and again before July.

On the global front, European markets were trading in green, after France consumer confidence strengthened to a 29-month high in November. The survey results from the statistical office Insee showed that the consumer sentiment index climbed unexpectedly to 106 in November from 104 in October. Asian markets ended mostly in green, after Hong Kong's trade deficit decreased in October as the fall in imports exceeded the drop in exports. The data from the Census and Statistics Department showed that the trade deficit fell to HK$30.59 billion in October from HK$44.49 billion in the same month last year.

Back home, the automobile industry stocks ended higher, after Auto industry body, the Society of Indian Automobile Manufacturers (SIAM) signed a pact with Korea Automobile Manufacturers Association (KAMA) for cooperation and support in promoting a sustainable, safe, clean, affordable and efficient automobile industry. Further, stocks related to the metal sector also gained, as Steel Minister Dharmendra Pradhan said that crude steel production capacity has increased by over 32 million tonnes during the last five years and it is being further expanded by 28 million tonnes per annum.

Finally, the BSE Sensex surged 199.31 points or 0.49% to 41,020.61, while the CNX Nifty was up by 63.00 points or 0.52% to 12,100.70.

The BSE Sensex touched high and low of 41,075.76 and 40,848.70, respectively and there were 25 stocks advancing against 06 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.82%, while Small cap index was up by 0.19%.

The top gaining sectoral indices on the BSE were Auto up by 1.22%, Oil & Gas up by 1.05%, Basic Materials up by 1.03%, PSU up by 0.95% and Metal up by 0.91%, while Capital Goods down by 1.09%, Realty down by 0.64%, Telecom down by 0.41%, Industrials down by 0.25% and Power down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 7.65%, SBI up by 2.43%, Maruti Suzuki up by 2.38%, Sun Pharma up by 1.87% and Hindustan Unilever up by 1.78%. On the flip side, Larsen & Toubro down by 2.05%, ICICI Bank down by 1.07%, ITC down by 0.86%, Tata Steel down by 0.81% and NTPC down by 0.77% were the top losers.

Meanwhile, Reserve Bank of India (RBI) deputy governor MK Jain has warned bankers about the growing stress in Pradhan Mantri Mudra Yojana (PMMY) also known as Mudra loans, which has crossed more than Rs 3.21 lakh crore RPT crore system-wide and asked them to monitor such loans closely as unsustainable credit growth in the sector can risk the system. The government had launched the Mudra scheme in April 2015 for providing loans up to Rs 10 lakh to the non-corporate, non-farm small/micro enterprises and which normally do not get bank funds due to their poor and mostly no credit rating. These loans are extended by banks, NBFCs, RRBs, cooperative banks and small finance banks.

RBI deputy governor said 'Mudra loans are a case in point. While such a massive push would have lifted many beneficiaries out of poverty, there has been some concerns at the growing level of non-performing assets (NPAs) among these borrowers.' He also said systemic risk may arise from unsustainable credit growth, increased interconnectedness, pro-cyclical and financial risks manifested by lower profitability. He noted that it is interesting to see leading e-commerce companies tying up with banks and NBFCs to offer working capital loans to their suppliers, which are mostly micro and small enterprises, at competitive terms.

Stating that GST has hit the informal economy significantly, Jain said as a result of the improved digital footprint, MSMEs have become attractive clients for banks, NBFCs, and MFIs, thereby reducing their dependence on the informal source of funds. He said the cost of credit for MSMEs will also come down meaningfully as lending will shift from collateral-based lending to cash flow based lending. Noting that technology has its own share of risks and challenges for the financial sector regulators and supervisors, he said early recognition of these risks and initiating action to mitigate the related regulatory and supervisory challenges is key to harnessing the full potential of these developments. He added that the focus of the MFI sector must be on digital finance, and data confidentiality and consumer protection are major areas that also need to be addressed by bankers.

The CNX Nifty traded in a range of 12,114.90 and 12,055.15. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 8.31%, Ultratech Cement up by 3.09%, SBI up by 2.86%, Maruti Suzuki up by 2.44% and Hindalco up by 2.19%. On the flip side, Bharti Infratel down by 3.20%, Cipla down by 2.20%, Larsen & Toubro down by 1.75%, ITC down by 1.00% and ICICI Bank down by 0.77% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 34.33 points or 0.46% to 7,437.47, France’s CAC rose 15.95 points or 0.27% to 5,945.57 and Germany’s DAX was up by 66.69 points or 0.5% to 13,303.11.

Asian markets ended mostly higher on Wednesday on growing expectations the United States and China are nearing an agreement to scale back their bruising trade war. US President Donald Trump declared Tuesday that talk with China on the first phase of a trade deal were near completion after negotiators from both sides spoke by phone, signaling progress on an accord in the works for nearly two years. Though, Chinese shares ended lower after the data showed profits at China's industrial firms declined in annual terms for the third consecutive month in October. China's industrial profits decreased 9.9 percent in October year-on-year to 427.56 billion yuan ($60.74 billion), marking the biggest drop since January-February period and compared with a 5.3 percent decline in September.