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Indian bourses end in positive territory amid firm global cues
Aug-10-2020

Indian equity benchmarks slipped from day's high but still ended in the positive territory on Monday on the back of positive global cues, encouraging quarterly numbers by select pharma companies. Markets started this week’s trading with gains of around a percent each, as traders took encouragement with Niti Aayog CEO Amitabh Kant’s statement that India's FDI regime is the most liberal in the world, and even during the COVID-19 pandemic, the country has attracted over $22 billion worth of direct investments. Sentiments also got boost after Prime Minister Narendra Modi launched financing facility of Rs 1 lakh crore under the Agri-Infra Fund that will help create post-harvest infrastructure in villages and generate jobs. Adding the optimism among investors, Union minister Nitin Gadkari has urged the industry to identify the sectors heavily reliant on imports, particularly from China, and look for substitutes towards indigenous production to make India a super power.

Domestic markets maintained their upward momentum in the afternoon session, with Commerce and Industry Minister Piyush Goyal’s statement that the world is looking for trusted partners where there is rule of law, transparency in systems, strong judiciary and democratic traditions, and India can become a key player in global supply chains as it provides all of these. He said India has to engage with the world with competitive prices, high-quality products, large scale economies of manufacturing, high productivity levels, but not on the crutches of government subsidies. However, markets trimmed most of their initial gains to come off day’s high in late afternoon session, despite Crisil Ratings’ report stated that one-time restructuring of corporate loans, which are facing stress due to coronavirus-induced disruptions, announced by the Reserve Bank of India (RBI) is likely to ease liquidity pressure for companies.

On the global front, Asian markets ended mostly higher on Monday as investors digested news that U.S. President Donald Trump has signed executive orders aimed at extending coronavirus relief to Americans. In addition, U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin said they were open to restarting talks on funding, raising hopes of additional stimulus measures. European markets were trading higher, after U.S. jobs data beat forecasts and a report showed China's factory deflation eased in July, adding to signs of an economic recovery. However, markets were off their day's highs amid a fresh flare-up in Sino-U.S. tensions and continued uncertainty about a deal on a U.S. stimulus package.

Back home, on the sectoral front, stocks related to defence sector were in limelight as India Inc said the Centre's decision to impose restrictions on import of 101 weapons and military platforms, and creation of a separate budget for domestic capital procurement in the current financial year is a 'path-breaking' reform towards becoming self-reliant and will boost indigenous defence manufacturing. There was some reaction in coal stocks with a private report that India's coal import fell 43.2% to 11.13 MT in July this year on account of high stockpile of the dry fuel at pitheads, plants and ports.

Finally, the BSE Sensex gained 141.51 points or 0.37% to 38,182.08, while the CNX Nifty was up by 56.10 points or 0.50% to 11,270.15.

The BSE Sensex touched high and low of 38,430.69 and 38,073.29, respectively and there were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.42%, while Small cap index was up by 1.47%.

The top gaining sectoral indices on the BSE were Healthcare up by 4.69%, Capital Goods up by 3.30%, Realty up by 2.73%, Industrials up by 2.10% and Utilities up by 1.59%, while Energy down by 0.99% and Oil & Gas down by 0.13% were the only losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 4.81%, Mahindra & Mahindra up by 4.75%, Sun Pharma up by 3.41%, Tech Mahindra up by 2.87% and NTPC up by 2.80%. On the flip side, Reliance Industries down by 1.26%, Asian Paints down by 1.25%, Maruti Suzuki down by 1.09%, Bajaj Finserv down by 1.03% and Ultratech Cement down by 0.88% were the top losers.

Meanwhile, Former Niti Aayog Vice-Chairman Arvind Panagariya has said that India is going to need perhaps 'a little bit of stimulus' on the demand side as the country’s Gross Domestic Product (GDP) growth begins to pick up. He also said that imposing import licensing will be a violation of WTO norms that India has signed.  He said 'down the road, as the economy is continuing to open up, if we see that inventories are accumulating rapidly then that would be a clear sign that there is a demand deficiency problem.’

Panagariya has pointed out that even with the current level of intervention, India is staring at the debt-to-GDP ratio rising from 72 percent to about 85 percent at least by the end of the current year. He noted that the government in May announced nearly Rs 21 lakh crore stimulus package to help the nation tide over the economic crisis induced by the coronavirus and subsequent lockdowns. He opined that a large fiscal stimulus in India would not have produced result as it has not given results in the US or Europe. He argued that large stimulus could help if the supply curve is positively sloped.

Talking about the government's 'Aatmanirbhar' programme, he said ‘Aatmanirbharata (self-reliance) does not require that you got to produce everything that you consume. Import substitution is not a good idea. What worried me actually, is turn in the policies that have happened three years ago and the trend has not reversed itself.’ He noted that he does not think that the talk of 'Aatmanirbharata' accelerated the process of import substitution policies.

The CNX Nifty traded in a range of 11,337.30 and 11,238.00 and there were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Cipla up by 9.48%, Mahindra & Mahindra up by 4.90%, Larsen & Toubro up by 4.84%, Tata Motors up by 3.57% and Sun Pharma up by 3.45%. On the flip side, Eicher Motors down by 2.19%, Asian Paints down by 1.23%, Maruti Suzuki down by 1.20%, BPCL down by 1.17% and Reliance Industries down by 1.16% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 23.28 points or 0.39% to 6,055.46, France’s CAC increased 19.86 points or 0.41% to 4,909.38 and Germany’s DAX increased 16.98 points or 0.13% to 12,691.86.

Asian markets ended mostly higher on Monday on expectations for additional stimulus measures in the United States to protect the corona virus-hit economy. US President Donald Trump signed several executive orders aimed at extending corona virus relief to Americans. The orders include extending enhanced unemployment benefits and the federal eviction moratorium, imposing a payroll tax holiday and further suspending federal student loan payments. Chinese shares ended higher as improvement in factory data calmed nerves over a ramp up in Sino-US tensions ahead of trade talks at the end of the week. Meanwhile, China's consumer inflation accelerated 2.7 percent for the second straight month in July, exceeded expectations for an increase of 2.6 percent and was up from the 2.5 percent gain in June. Meanwhile, markets in Japan and Singapore were closed for Mountain Day and National Day holidays, respectively.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,379.25
25.21
0.75

Hang Seng

24,377.43
-154.19
-0.63

Jakarta Composite

5,157.83
13.94
0.27

KLSE Composite

1,571.66

-6.48

-0.41

Nikkei 225

-

-

-

Straits Times

-

-

-

KOSPI Composite

2,386.38
34.71
1.48

Taiwan Weighted

12,894.00
65.13
0.51
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