Last trading day of the week turned out to be fabulous day for Indian equity benchmarks where frontline gauges garnered gain of over half a percent each to settle above their crucial 39,900 (Sensex) and 11,750 (Nifty). Markets started the day on optimistic note as traders opted to buy beaten down but fundamentally strong stocks after yesterday’s bloodbath. Sentiments remained positive with Moody's Investors Service in its latest report has said that while the government's second round of stimulus will spur consumer spending over the near term as coronavirus-related restrictions continue to be eased and India's festive season begins, the support to the country’s Gross domestic product (GDP) growth will be minimal. Traders also remained optimistic on report that India’s merchandise exports grew by 5.99 percent to $27.58 billion in September 2020 as compared to same period of last year, on account of growth in shipments of drugs and pharmaceuticals and readymade garments. Trade deficit, gap between imports and exports, narrowed to $2.72 billion in September 2020 as compared to a shortfall of $11.67 billion in the year ago-month.
Despite some volatility, markets traded in green and ended with a gain of over half a percent as sentiments remained soothing with Union Health Minister -- Harsh Vardhan’s statement that India is expected to have a COVID-19 vaccine in a few months and the country should be in the process of delivering it to people in the next six months. He said to fight against COVID-19 the social vaccine of maintaining a distance of six feet should be followed, along with regular washing of hands and wearing of masks and face covers, especially in public places. Some support also came with Finance Minister Nirmala Sitharaman’s statement that V-shaped pattern of recovery is being seen in several high-frequency indicators, driven by various measures taken by the government to revive economic growth, hit hard by the outbreak of Covid-19 pandemic. She said several low-income and developing countries are confronted with the challenge to protect and ensure livelihood for millions slipping below the poverty line.
Positive opening in European markets too aided sentiments with all the European markets trading in green. Asian markets ended mostly lower on Friday, after South Korea's unemployment rate rose in September as the coronavirus pandemic weighed on the labor market. The data from Statistics Korea revealed that the jobless rate rose to a seasonally adjusted 3.9 percent in September from 3.2 percent in August. In the same month last year, the unemployment rate was 3.4 percent. Back home, stocks related to real estate sector edged higher despite private report that private equity (PE) investment in Indian real estate fell 57 per cent year-on-year to around $2.3 billion during January-September this year as investors remained cautious due to COVID-19 pandemic. Stocks related to apparel industry too edged higher despite ICRA’s report that Indian apparel exporters are likely to see a decline of 20-25 per cent in their turnover in 2020-21, while those focused on domestic market are expected to witness a 30-40 per cent decline in revenue due to the COVID-19 pandemic.
Finally, the BSE Sensex surged 254.57 points or 0.64% to 39,982.98, while the CNX Nifty was up by 82.10 points or 0.70% to 11,762.45.
The BSE Sensex touched high and low of 40,125.71 and 39,699.42, respectively and there 24 stocks advancing against 6 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index jumped 1.05%, while Small cap index was up by 0.97%.
The top gaining sectoral indices on the BSE were Metal up by 3.70%, Realty up by 2.60%, Bankex up by 1.95%, Basic Materials up by 1.80% and Utilities up by 1.61%, while Energy down by 0.82% was the lone losing index on the BSE.
The top gainers on the Sensex were Tata Steel up by 5.38%, HDFC Bank up by 2.55%, Power Grid up by 2.38%, Ultratech Cement up by 2.23% and Kotak Mahindra Bank up by 2.10%. On the flip side, HCL Tech down by 3.76%, Mahindra & Mahindra down by 1.72%, Reliance Industries down by 1.36%, Asian Paints down by 1.17% and Nestle down by 1.02% were the top losers.
Meanwhile, Moody's Investors Service in its latest report has said that while the government's second round of stimulus will spur consumer spending over the near term as coronavirus-related restrictions continue to be eased and India's festive season begins, the support to the country’s Gross domestic product (GDP) growth will be minimal. It said after a long clamour for fiscal stimulus, the government had on October 12 come up with measures with direct fiscal support to people and states and to generate demand. It noted that these included a leave travel concession (LTC) cash voucher scheme and special festival advance for government employees and Rs 12,000 crore interest-free loan to states and Rs 25,000 crore additional capex.
As per to the report, even when combined with the government's fiscal stimulus earlier in 2020, the size of the measures remains modest. In total, it said the two rounds of stimulus bring the government's direct spending on coronavirus-related fiscal support to around 1.2 percent of GDP. It noted that this compares with an average of around 2.5 per cent of GDP for BAA-rated peers as of mid-June. It also said that India's very weak fiscal position has constrained its scope for discretionary stimulus spending in response to the coronavirus shock.
Moody's expects India’s debt burden to touch 90 percent of GDP in 2020, up from 72 percent of GDP in 2019 which is significantly higher than the median of similar rated countries, of around 59 percent. The large debt burden is driven by chronically wide fiscal deficits. It stated that weaker government revenue, driven by the economic contraction and reduced corporate tax rates announced in September 2019, would widen the general government deficit to around 12 percent of GDP in the current fiscal.
The CNX Nifty traded in a range of 11,667.85 and 11,789.75 and there were 39 stocks advancing against 11 stocks declining on the index.
The top gainers on Nifty were JSW Steel up by 6.69%, Tata Steel up by 5.38%, BPCL up by 4.35%, Hindalco up by 3.66% and Divis Lab up by 3.64%. On the flip side, UPL down by 7.73%, HCL Tech down by 3.48%, Mahindra & Mahindra down by 1.83%, Asian Paints down by 1.27% and Reliance Industries down by 1.26% were the top losers.
European markets were trading higher, UK’s FTSE 100 increased 54.40 points or 0.93% to 5,886.92, France’s CAC increased 64.37 points or 1.33% to 4,901.79 and Germany’s DAX was up by 73.66 points or 0.58% to 12,777.41.
Asian markets ended mostly lower on Friday followed by resurgence in corona virus cases in Europe and the United States stoked concerns about a global economic recovery. Concerns that several parts of European countries started another round of lockdowns to contain the spread of the corona virus too added pressure on markets' sentiment. Further, uncertainties surrounding new US fiscal stimulus turned markets cautious. A stalemate in fiscal stimulus negotiations continued despite US President Donald Trump's offer to raise the size of a stimulus package. However, Chinese shares ended higher ahead to the release of third-quarter GDP data due next week. The Chinese economy is expected to have grown 5.2 percent in July-September from a year earlier, faster than the second quarter’s 3.2 percent.
Asian Indices | Last Trade | Change in Points | Change in % |
Shanghai Composite | 3,336.36 | 4.18 | 0.13 |
Hang Seng | 24,386.79 | 228.25 | 0.94 |
Jakarta Composite | 5,103.41 | -1.74 | -0.03 |
KLSE Composite | 1,503.84 | -10.11 | -0.67 |
Nikkei 225 | 23,410.63 | -96.60 | -0.41 |
Straits Times | 2,533.02 | 9.40 | 0.37 |
KOSPI Composite | 2,341.53 | -19.68 | -0.83 |
Taiwan Weighted | 12,750.37 | -77.45 | -0.60 |
