Sensex, Nifty settle at record closing highs

The bulls continued to maintain their firm grip on Tuesday as Indian equity benchmarks gained over 0.70 percent each to settle at record closing highs, led by positive sentiments in the broader Asian markets. Markets made optimistic start and traded in green terrain for whole day, as investor sentiment was bolstered by news that US drug maker Moderna's coronavirus vaccine was 94.5 per cent effective in preventing COVID-19 infection. Sentiments also got a boost with a private report that the Indian economy is seen recovering faster than expected and the Reserve Bank is likely to have come to an end of the rate easing cycle. However, in late morning session, key gauges erased some of their initial gains with government data showing that India's exports fell 5.12 per cent to $24.89 billion in October, after recording positive growth in September, on account of drop in shipments of petroleum products, gems and jewellery, leather and engineering goods. Besides, trade deficit in October narrowed to $8.71 billion as against $11.75 billion in the corresponding month a year ago. Also, the wholesale price-based inflation rose to an eight-month high of 1.48 percent in October, as manufactured products turned costlier. The WPI inflation was 1.32 percent in September and zero percent in October last year.

But, domestic indices regained upward momentum in second half of the trading session, taking support from Chairman Supratim Bandyopadhyay’s statement that pension fund regulator PFRDA will propose to the government to make employers' contribution of 14 per cent under NPS tax free for all categories of subscribers in the next Budget. Employers' contribution of 14 per cent in pension under the National Pension System (NPS) scheme for the central government employees was made tax free from April 1, 2019. Some support also came after Foreign portfolio investors (FPIs) have invested a massive Rs 35,109 crore in Indian markets in November so far as corporate earnings and reforms measures undertaken by the government to revive investment activities. Market participants also took a note of Fitch Solutions’ report that India's third tranche of stimulus measures (Stimulus 3.0) should support economic rebound over the coming quarters but the actual fiscal impact is difficult to ascertain.

On the global front, Asian markets ended mostly higher on Tuesday following the record closing highs overnight on Wall Street after Moderna said data from a late-stage trial showed its coronavirus vaccine candidate was 94.5 percent effective in preventing infection. European markets were trading lower with worries about rising Covid-19 cases and lingering uncertainty over a possible fiscal stimulus package in the U.S. keeping investors worried. Back home, on the sectoral front, aviation stocks were in focus as Civil aviation minister Hardeep Singh Puri said that domestic aviation operations reached a new high on occasion of Diwali as 2,25,097 passengers flew on 1,903 flights. Majority of power stocks ended in green as the power ministry data showing that India's power consumption grew 7.8 percent to 50.15 billion units (BU) in the first half of November this year, showing rise in economic activities. Power consumption in the country was recorded at 46.52 BU during November 1-15 last year.   

Finally, the BSE Sensex rose 314.73 points or 0.72% to 43,952.71, while the CNX Nifty was up by 93.95 points or 0.74% to 12,874.20.

The BSE Sensex touched high and low of 44,161.16 and 43,699.22, respectively and there were 19 stocks advancing against 11 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.08%, while Small cap index was up by 0.88%.

The top gaining sectoral indices on the BSE were Industrials up by 2.27%, Metal up by 2.11%, Capital Goods up by 1.99%, Bankex up by 1.88% and Finance up by 1.88%, while Oil & Gas down by 1.08%, Healthcare down by 0.74%, IT down by 0.50%, TECK down by 0.42% and Energy down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 6.24%, SBI up by 4.59%, HDFC Bank up by 2.81%, Bajaj Finance up by 2.62% and Axis Bank up by 2.50%. On the flip side, NTPC down by 2.69%, HCL Technologies down by 1.87%, ONGC down by 1.86%, Infosys down by 0.85% and ITC down by 0.72% were the top losers.

Meanwhile, Fitch Solutions in its latest report has said that India's third tranche of stimulus measures (Stimulus 3.0) should support economic rebound over the coming quarters but the actual fiscal impact is difficult to ascertain. It also noted that the country’s fiscal deficit is likely to be 7.8 percent of the GDP in the Fiscal Year'21 (April 2020 to March 2021). It also said the Production-Linked Incentive (PLI) scheme, for instance, spans across a five-year period, and their fiscal impact will likely only be seen from FY2021-22 onward.

Estimating using the outright fiscal outlays from this announcement, the report said ‘Stimulus 3.0' appears to suggest additional expenditure of Rs 1 lakh crore (0.44 per cent of FY2019/20 GDP). Moreover, it said the announcement did not outline any additional borrowing to finance these additional spending, which suggests a reallocation of FY2020/21 budget expenditure plans instead.

Recently, the government has announced another stimulus package, called Aatmanirbhar Bharat Abhiyaan 3.0, totaling Rs 2.65 lakh crore. The package included a boost to formal employment, the Production Linked (PLI) Scheme, an increase in the fertiliser subsidy and the rural employment programme, MGNREGA. Exactly a month after the 'Aatmanirbhar Bharat Abhiyaan 2.0' package – which included announcements regarding consumption and investment – was announced on October 12, the central government came out with its third round of stimulus package.

The CNX Nifty traded in a range of 12,934.05 and 12,797.10 and there were 30 stocks advancing against 19 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were Tata Motors up by 6.15%, Tata Steel up by 5.97%, HDFC Life Insurance up by 5.72%, SBI up by 5.09% and Adani Ports & SEZ up by 3.36%. On the flip side, BPCL down by 4.25%, Hero MotoCorp down by 2.62%, NTPC down by 2.53%, Indian Oil Corporation down by 1.96% and ONGC down by 1.93% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 37.83 points or 0.59% to 6,383.46, France’s CAC decreased 6.30 points or 0.12% to 5,465.18 and Germany’s DAX decreased 19.77 points or 0.15% to 13,118.84.

Asian markets ended mostly higher on Tuesday as expectations of a Covid-19 vaccine bolstered investors' sentiment. After Pfizer, US pharma giant Moderna has published its own preliminary analysis indicating its own vaccine had 94.5 percent effectiveness in preventing corona virus. Japanese shares ended marginally higher as reports of another promising corona virus vaccine re-ignited hope of a quick global recovery. However,, Chinese shares weighed down by losses in healthcare stocks on worries over lofty valuations, while more bond defaults hit sentiment.