Markets ascend to day’s high amid firm Asian cues

Going from strength to strength, the local equity indices gathered further ground and hit fresh intraday highs in afternoon trade, as stability returns to Asian markets and with crude oil prices dipping to a 13-month low. The broader markets too were broadly in-line with the benchmark indices. Sentiments remained up-beat as Niti Aayog CEO Amitabh Kant termed the Union Budget pragmatic and said the government is determined to bring Indian economy back to a high trajectory growth path. He further said if the government will be able to achieve disinvestment target of 2020-21 then the Budget will be very successful. Traders also took a note of Finance Minister Nirmala Sitharaman’s statement that the money raised through disinvestment will be used to develop infrastructure, which will have multiplier effect on the economy and not bridging revenue deficit. Investors paid no heed towards Fitch Ratings’ statement that India is expected to clock a GDP growth of 5.6% in the next financial year, as Budget 2020 has not materially altered its view on the country's growth outlook.

On the global front, Asian markets were trading higher amid efforts by Chinese officials to calm virus fears. Back home, the BSE Sensex is currently trading at 40661.76, up by 789.45 points or 1.98% after trading in a range of 40117.46 and 40702.22. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.44%, while Small cap index was up by 1.33%.

The top gaining sectoral indices on the BSE were Metal up by 2.88%, Energy up by 2.79%, Basic Materials up by 2.25%, Oil & Gas up by 2.09% and Bankex up by 2.06%, while there were no loosing indices on the BSE sectoral front.

The top gainers on the Sensex were Hero MotoCorp up by 3.66%, ICICI Bank up by 3.35%, Tata Steel up by 3.28%, ITC up by 3.13% and Bajaj Finance up by 3.13%. On the flip side, Bajaj Auto down by 3.18%, Hindustan Unilever down by 0.67% and Bharti Airtel was down by 0.03% were the top losers.

Meanwhile, Ratings agency India Ratings and Research (Ind-Ra) has revised its outlook on the steel sector to 'stable-to-negative' for the remaining of ongoing fiscal (FY20) given sluggish steel demand growth expectations owing to mix of structural and cyclical concerns in end-user sectors, primarily auto and real estate construction. It said the outlook also factors in increased import risks especially from Free Trade Agreement (FTA) countries such as Japan and South Korea due to adverse impact of the slowing global growth and continuing trade frictions. Besides, it said the demand growth in the steel sector in India is expected to be lower at around 4 percent in FY20, as against the earlier estimated growth of 7 percent.

According to the report, raw material availability and price risks may escalate in the fourth quarter if the uncertainty over iron ore mine auctions prolongs. It also expects overall steel sales volumes and margins to weaken further in the second quarter of FY20 after industry witnessed margin correction in the fourth quarter of FY19 and the first quarter of FY20. It said steel prices have been continuously softening, while raw material cost have only seen partial declines, thereby squeezing the gross spreads for steel producers. However, it expects steel demand to recover in H2FY20, supported by pickup in government investments, fiscal stimulus measures, improvement in market sentiment and H2FY19's lower base.

The agency believed that limited new capacity additions in FY20 will help balance the demand-supply situation amid sluggish demand in second half of FY20. It also said that steel producers are likely to see moderation in cash flows from operations as strong margins moderate over FY20 from the highs of FY19. It added that large integrated players should continue to have adequate liquidity supported by their sound market access and high financial flexibility, despite moderating profitability pressures, ongoing challenges in market liquidity and increased risk perception among investors.

The CNX Nifty is currently trading at 11943.80, up by 235.90 points or 2.01% after trading in a range of 11783.40 and 11953.00. There were 46 stocks advancing against 4 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 4.61%, Hero MotoCorp up by 4.03%, Hindalco up by 3.80%, Bharti Infratel up by 3.36% and Bajaj Finance up by 3.34%. On the flip side, Yes Bank down by 3.06%, Bajaj Auto down by 2.73%, Hindustan Unilever down by 0.60% and Eicher Motors down by 0.37% were the top losers.

All Asian markets were trading higher; Nikkei 225 surged 112.65 points or 0.49% to 23,084.59, Shanghai Composite gained 30.83 points or 1.12% to 2,777.44, Straits Times advanced 43.62 points or 1.4% to 3,159.93, KOSPI rose 39.02 points or 1.84% to 2,157.90, Jakarta Composite soared 39.74 points or 0.68% to 5,923.91, Taiwan Weighted strengthened 201.00 points or 1.77% to 11,555.92 and Hang Seng was up by 358.69 points or 1.36% to 26,715.67.