Benchmarks end near day’s high on Thursday

Indian equity benchmarks ended Thursday’s session with a gain of over half a percent, on the back of sustained buying by participants. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 11,200 (Nifty) and 38,100 (Sensex) bastions. After muted start, key indices gained some traction and managed to keep their heads above water, as traders took some support from Chief Economic Adviser (CEA) K V Subramanian’s statement that the government may announce more fiscal measures to boost demand once the uncertainty related to Coronavirus disease (COVID-19) pandemic wanes. Buying further crept in as calling for more investment in India, Prime Minister Narendra Modi said India is emerging as a land of opportunities. He added that stronger domestic economic capacities can ensure global resilience against external shocks.

Markets extended their gains in late afternoon session, as traders remained optimistic with Niti Aayog CEO Amitabh Kant’s statement that India will witness huge growth in digital lending as the COVID-19 pandemic has increased the acceptance of digital payments. Investors didn’t give any heed to a private report forecasts deeper distress for India which will lead to a 6 per cent growth contraction in FY21, citing the yet to be stabilised infection curve and the COVID-19 caseload in economically key states. According to the report, just 7 percent of the districts in economically key states of Maharashtra, Tamil Nadu and Gujarat, accounting for 30.5 percent of the national economic output, and in Karnataka and Andhra Pradesh account for as much as 70 percent of the caseload.

On the global front, Asian markets ended mixed on Thursday, as tensions between the U.S. and China escalated sharply after the U.S. ordered the closure of the Chinese consulate in Houston to protect Americans' intellectual property and private information. China vowed to retaliate and said the unilateral closure within a short period of time is an unprecedented escalation of its recent actions against China. European markets were trading higher, as upbeat earnings and a better-than-expected consumer confidence survey from Germany helped investors shrug off rising U.S.-China tensions. Market research group GfK said its forward-looking consumer sentiment index rose to -0.3 points from revised -9.4 in July. The expected reading was -5.0. Back home, on the sectoral front, telecom stocks were in focus with the Department of Telecom (DoT) ordering that telecom operators will now have to provide the location grid of the premises of bulk subscribers during physical verification for issuing new connections. Majority of pharma stocks ended higher as the department of pharmaceuticals notified two key policies -- Production Linked Incentive (PLI) scheme for promotion of domestic manufacturing of critical Key Starting Materials (KSMs)/ drug intermediates (DIs) and Active Pharmaceutical Ingredients (APIs) and scheme for promotion of bulk drug parks, in a bid to boost domestic manufacturing and reduce import dependence.

Finally, the BSE Sensex gained 268.95 points or 0.71% to 38,140.47, while the CNX Nifty was up by 82.85 points or 0.74% to 11,215.45.

The BSE Sensex touched high and low of 38,225.03 and 37,738.59, respectively and there were 21 stocks advancing against 8 stocks declining, while 1 stock remian unchanged on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.98%, while Small cap index was up by 0.61%.

The top gaining sectoral indices on the BSE were Energy up by 2.36%, Healthcare up by 1.65%, Realty up by 1.55%, Auto up by 1.35% and Oil & Gas up by 1.31%, while IT down by 0.61%, TECK down by 0.59% and Telecom down by 0.31% were the few losing indices on BSE.

The top gainers on the Sensex were SBI up by 3.28%, ICICI Bank up by 2.94%, Reliance Industries up by 2.82%, Tech Mahindra up by 2.28% and Kotak Mahindra Bank up by 2.14%. On the flip side, Axis Bank down by 3.80%, Hindustan Unilever down by 1.57%, Infosys down by 1.15%, TCS down by 0.88% and Ultratech Cement down by 0.67% were the top losers.

Meanwhile, pointing out that counter cyclical policy is important, Chief Economic Adviser (CEA) K V Subramanian has said that the government may announce more fiscal measures to boost demand once the uncertainty related to Coronavirus disease (COVID-19) pandemic wanes. He also said ‘the government is willing to do what is necessary in terms of government consumption but timing of this is extremely important...Till we have uncertainty, even if people have money in their pockets, they may decide to keep it in their bank.’

CEA said people are saving rather than spending due to uncertainty and added that even Jan Dhan account holders whose marginal propensity to consume is very high are indulging in saving. He said the right point would be if vaccines come and thereby uncertainty goes down. I think the time would be very right for the fiscal push which will really generate demand even for discretionary items.’ He noted that demand is important, countercyclical policy is important but the timing is also as important to ensure value for money spent.

Pointing out that the banking sector is holding back growth in a significant manner, Subramanian said India lags behind in global size which has affected investment. Thus, he said there are problems of scale and quality of lending and the banking sector in India has been also lagging in terms of technology adaptation like data analytics.

The CNX Nifty traded in a range of 11,238.10 and 11,056.55 and there were 37 stocks advancing against 12 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Eicher Motors up by 4.87%, Reliance Industries up by 3.59%, ICICI Bank up by 3.59%, Tech Mahindra up by 3.47% and SBI up by 3.26%. On the flip side, Axis Bank down by 3.77%, Shree Cement down by 1.91%, Hindustan Unilever down by 1.43%, TCS down by 0.76% and Infosys down by 0.72% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 32.62 points or 0.53% to 6,239.72, France’s CAC rose 26.84 points or 0.53% to 5,063.96 and Germany’s DAX was up by 83.87 points or 0.64% to 13,188.12.

Asian markets ended mixed on Thursday due to escalating tensions between the world’s largest economies after the United States government ordered the closure of the Chinese consulate in Houston to protect Americans' intellectual property and private information. While, Beijing denounced the order as ‘outrageous’ and said it would draw a firm response if the decision was not reversed. Seoul shares ended down after data showed the country has fallen into recession for the first time in 17 years as exports plunged due to the corona virus pandemic. Meanwhile, Japanese market was closed for the Marine Day holiday.