Indian equities take winning run to 8th day; Nifty just shy of 12,750 level

Indian equity benchmarks witnessed a significant bout of volatility but ended at yet another record closing high on Wednesday amid broad-based buying, thus settling in the green for the eighth session in a row. Markets made an optimistic start and traded over half percent higher, tracking largely positive cues from global markets and strong foreign fund inflows. Traders took encouragement as the health ministry said the National Expert Group on Vaccine Administration for COVID-19 is in conversation with all vaccine manufacturers, including domestic and foreign ones, a day after Pfizer Inc. and BioNTech SE announced more than 90 per cent efficacy of their potential vaccine for the coronavirus. Support also came as Commerce and Industry Minister Piyush Goyal and Minister of State Hardeep Singh Puri held a virtual dialogue with their UK counterparts to review the progress towards a post-Brexit Enhanced Trade Partnership with Britain, which could lead to a free trade agreement in the future.

However, key gauges slipped into the red in the middle of the session, as some cautiousness came with Rating agency ICRA’s report that states are likely to cut capital outlay on infrastructure by up to 40 percent, with coronavirus disease (covid-19) pandemic severely impacting revenues of state governments, and additional expenditure towards healthcare and public welfare. But, domestic markets managed to recoup all its losses to end near the highest point of the day, taking support from Crisil Ratings in its latest report stated that revenue of the agrochemical sector is likely to grow 12-14 per cent in the ongoing financial year (FY21) on the back of sharp recovery in offtake from domestic agriculture sector and continuing healthy exports. Meanwhile, the Centre government has released Rs 6,195 crore as the eight equated monthly installment of post-devolution revenue deficit grants to 14 states. The 14 states included Andhra Pradesh, Assam, Himachal Pradesh (HP), Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim, Tamil Nadu, Tripura, Uttarakhand and West Bengal.

On the global front, Asian markets ended mostly higher on Wednesday, while European markets were trading higher, as hopes of a successful coronavirus vaccine and receding U.S. political uncertainty helped offset worries about a surge in coronavirus cases worldwide. Besides, customs data showed South Korea's exports rose an annual 20.1 percent in the first 10 days of November on strong chip sales and solid demand from major trading partners. Another report revealed the country's unemployment rate climbed to a three-month high in October, while the number of employed fell at the fastest pace in six months. Back home, on the sectoral front, select Telecom stocks ended higher with Telecom Regulatory Authority of India (Trai) in its latest data has indicated that the telecom industry has added 37.4 lakh mobile users in August 2020. The overall telecom subscriber base for wireless connections stood at 114.7 crore in August 2020, compared to 114.4 crore in July 2020, registering a monthly growth rate of 0.33 percent. Sugar stocks were also buzzing with a private report that India has revived a proposal to get sugar mills to export 6 million tonnes of the sweetener by incentivising overseas sales in the 2020/21 season, the third year in a row, as part of efforts to cut surplus stocks and prop up local prices.

Finally, the BSE Sensex rose 316.02 points or 0.73% to 43,593.67, while the CNX Nifty was up by 118.05 points or 0.93% to 12,749.15.

The BSE Sensex touched high and low of 43,708.47 and 42,970.21, respectively and there were 26 stocks advancing against 4 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.77%, while Small cap index was up by 0.34%.

The top gaining sectoral indices on the BSE were Metal up by 3.51%, Healthcare up by 2.95%, IT up by 2.05%, TECK up by 1.99% and Utilities up by 1.83% while, Energy down by 3.11% and Consumer Durables down by 1.30% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 7.39%, Axis Bank up by 4.28%, Bajaj Finserv up by 3.94%, ITC up by 3.87% and Kotak Mahindra Bank up by 3.12%. On the flip side, Indusind Bank down by 5.62%, Reliance Industries down by 4.20%, Titan Company down by 2.33%, Asian Paints down by 0.95% and Hindustan Unilever down by 0.34% were the top losers. 

Meanwhile, rating agency ICRA in its latest report has said that states are likely to cut capital outlay on infrastructure by up to 40 percent, with coronavirus disease (covid-19) pandemic severely impacting revenues of state governments, and additional expenditure towards healthcare and public welfare. It noted that major states together had a budgeted capital outlay of over Rs 5.7 lakh crore for 2020-21 as against revised estimate of Rs 5.1 lakh crore in 2019-20.

According to the report, some states could witness a steeper decline depending on the extent of additional borrowings, which is availed. It noted that with covid-19 and the related slowdown in the economic activities, states are staring at a significant decline in their revenues, which in turn could push them to cut down on discretionary expenditure including deferment of capital outlay. Furthermore, it said of the Rs 111 trillion worth infrastructure investments planned under the National Infrastructure Pipeline (NIP), about 40 percent is from state governments.

ICRA has stated that NIP envisages the state’s budgetary outlay on capital investments to be around 1.7 percent of GDP and states are expected to fund 24-26 per cent of the total expenditure under NIP. To bridge the shortfall, it said states’ unconditional borrowing limit has been raised from 3 per cent of gross state domestic product (GSDP) to 4 per cent of GSDP for 2020-21. It added that States also have the option of availing another 1 per cent of the GSDP, but on completing specified reforms.

The CNX Nifty traded in a range of 12,769.75 and 12,571.10 and there were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 8.03%, Tata Steel up by 7.66%, Dr. Reddys Lab up by 4.15%, Axis Bank up by 4.14% and Eicher Motors up by 3.93%.
On the flip side, Indusind Bank down by 5.23%, Reliance Industries down by 4.13%, Titan Company down by 2.09%, Asian Paints down by 0.90% and Britannia Industries down by 0.47% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 37.07 points or 0.59% to 6,333.92, France’s CAC increased 27.53 points or 0.51% to 5,446.50 and Germany’s DAX increased 54.38 points or 0.41% to 13,217.49.

Asian markets ended mostly higher on Wednesday as easing US political uncertainty helped offset worries about a surge in corona virus cases globally. Japanese shares ended higher on upbeat company earnings reports and expectations of a quick global economic recovery from the Covid-19 pandemic following encouraging developments in the corona virus vaccine too supported the rally. Pfizer Inc and BioNTech released positive interim phase III results from their Covid-19 vaccine candidate on Monday, with the results suggesting that the vaccine was 90 percent effective in preventing infection. South Korean shares closed up following upbeat trade data. South Korea's exports rose an annual 20.1 percent in the first 10 days of November on strong chip sales and solid demand from major trading partners, customs data showed. The nation's unemployment rate climbed to a three-month high in October, while the number of employed fell at the fastest pace in six months, another report revealed. Though, Chinese shares ended lower as concerns about tighter regulation over big tech firms weighed sentiments.