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Benchmarks end higher for second day in row
Oct-19-2020

In a highly volatile day, Indian equity benchmarks ended higher for second day in row on Monday, on the back of a broad-based buying interest led by gains in banking, financial services, Oil & Gas and Metal shares. Positive global cues also boosted investor sentiment. Markets made an optimistic start and stayed in green for whole day, as traders got respite with Finance Minister Nirmala Sitharaman’s statement that the government has taken a host of initiatives, including a stimulus package totalling 10 percent of the country's GDP and major reforms in the labour sector, to contain the spread of coronavirus disease (covid-19) pandemic and also to mitigate its social and economic impact. Some support also came with ICRA Ratings’ report that farm sentiments have remained buoyant mainly driven by healthy monsoon and further optimism of a good kharif crop. It also said agriculture income is likely to benefit over the medium term aided by increased government focus on rural income coupled with the recently introduced farm reforms.

However, in afternoon deals, key gauges erased most of their initial gains, as traders got anxious with report that after six months of severe stress triggered by the toughest lockdown so far, some high-frequency indicators point towards economic recovery but there are signs that this revival is fragile. It estimated that the economy is likely to contract by 13.5 per cent in the second quarter (July-September), and the contraction in FY21 (April 2020 to March 2021) is likely to be around 9.5 per cent unless the government takes immediate initiative to revive the economy. But, markets regained upward momentum in late afternoon deals and settled with decent gains, as optimism remained among traders with the government stating that central public sector enterprises have cleared payments to the tune of Rs 13,400 crore owed to micro, small and medium enterprises in the last five months and Rs 3,700 crore was paid to the units in September alone. The micro, small and medium enterprises (MSME) Ministry this month has written to the top management of over 2,800 corporates by name to make payment of pending dues of MSMEs.

On the global front, Asian markets ended mostly higher on Monday, while European markets were trading mostly in green, on the back of optimism about a U.S. stimulus package before the presidential elections in November and a coronavirus vaccine before the end of this year. Some support also came with the Ministry of Finance said Japan posted a merchandise trade surplus of 674.978 billion yen in September. That was shy of expectations for a surplus of 989.8 billion yen, but still up from the 248.3 billion yen surplus in August. Besides, China’s Industrial production jumped 6.9 percent from a year earlier in September - beating forecasts for a gain of 5.8 percent and up from 5.6 percent in August. Retail sales climbed an annual 3.3 percent, exceeding expectations for a rise of 1.8 percent following the 0.5 percent gain in the previous month. Fixed asset investment was up an annual 0.8 percent to date in September, matching forecasts following the 0.3 percent fall a month earlier. However, the National Bureau of Statistics said China's GDP grew 4.9 percent year-on-year in the third quarter of 2020, missing forecasts for a gain of 5.2 percent but still up from 3.2 percent in the three months prior.

Back home, on the sectoral front, majority of auto stocks were trading in red with SIAM’s report that passenger vehicle exports from India declined 57.52 per cent in April-September period of the current fiscal year as COVID-19 related disruptions hampered despatches to various global markets. Real estate stocks were also buzzing as the Reserve Bank of India rationalised the risk weightage to LTV (loan to value) ratio for all new housing loans sanctioned up to March 31, 2022, in a bid to increase flow of credit to the real estate sector. Also, there was some reaction in power stocks with the government data showing that India's power consumption grew 11.45 per cent to 55.37 billion units (BU) in the first half of October this year, mainly driven by buoyancy in industrial and commercial activities.

Finally, the BSE Sensex surged 448.62 points or 1.12% to 40,431.60, while the CNX Nifty was up by 110.60 points or 0.94% to 11,873.05.

The BSE Sensex touched high and low of 40,519.48 and 40,211.22, respectively and there 23 stocks advancing against 7 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.58%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Bankex up by 3.35%, Finance up by 2.63%, Oil & Gas up by 1.82%, Metal up by 1.70% and Realty up by 1.58%, while Auto down by 1.12%, Healthcare down by 0.87%, Telecom down by 0.66%, TECK down by 0.49% and IT down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 5.33%, Axis Bank up by 4.43%, Nestle up by 4.25%, SBI up by 4.21% and HDFC up by 3.76%. On the flip side, Bajaj Auto down by 2.12%, TCS down by 1.76%, Mahindra & Mahindra down by 1.49%, Bharti Airtel down by 1.07% and Maruti Suzuki down by 0.70% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said that the government has taken a host of initiatives, including a stimulus package totalling 10 percent of the country's GDP and major reforms in the labour sector, to contain the spread of coronavirus disease (covid-19) pandemic and also to mitigate its social and economic impact. She noted that covid -19 pandemic continues to impact the developing and developed countries. She added that the hard fought gains in reducing the level of poverty, achieved over a number of years, are at great risk of being lost.

Sitharaman has stated that the government had announced the first stimulus of $23 billion to provide direct cash transfers and food security measures to poor. She pointed out that this was followed by a special economic package of $271 billion -- equivalent to 10 percent of India's GDP -- based on a clarion call by Prime Minister Narendra Modi for 'Aatmanirbhar Bharat' or self-reliant India. She also said measures have been announced to provide relief to the business, bring about major reforms in the labour sector by simplifying, amalgamating and rationalising 44 central labour laws, provide effective social protection to the migrant workers through National Portability of ration cards.

The minister further said the rural sector has been provided support by way of refinance support through NABARD, injection of additional liquidity of $27.13 billion in the farm sector and by way of increased allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). With regard to strengthening of health infrastructure in the wake of the pandemic, she said the government has committed $2.03 billion for this.

The CNX Nifty traded in a range of 11,898.25 and 11,820.40 and there were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 5.11%, Nestle up by 4.53%, GAIL India up by 4.17%, Axis Bank up by 4.16% and SBI up by 4.08%. On the flip side, Divis Lab down by 3.60%, Eicher Motors down by 3.15%, Hero MotoCorp down by 2.94%, Cipla down by 2.33% and Bajaj Auto down by 2.02% were the top losers.

European markets were trading mostly in green; France’s CAC increased 40.29 points or 0.82% to 4,976.15 and Germany’s DAX rose 2.95 points or 0.02% to 12,911.94, while UK’s FTSE 100 decreased 11.14 points or 0.19% to 5,908.44.

Asian markets ended mostly higher on Monday as lingering expectations for a new US stimulus package before the US presidential election offset concerns about surging corona virus infections in Europe, the Americas and parts of Asia. Japanese shares ended higher after data showed the country posted a merchandise trade surplus of 674.978 billion yen in September, up from the 248.3 billion yen surplus in August. However, Chinese shares ended lower after data showed China’s GDP grew 4.9 percent year-on-year in the third quarter of 2020, missing expectations for a 5.2 percent growth. While, Retail sales expanded 3.3 percent in September, industrial production grew 6.9 percent in the month and investment growth accelerated to 0.8 percent in the nine months to the end of the quarter.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,312.67
-23.69
-0.71

Hang Seng

24,542.26
155.47
0.64

Jakarta Composite

5,126.33
22.92
0.45

KLSE Composite

1,518.11

14.27

0.95

Nikkei 225

23,671.13
260.50
1.11

Straits Times

2,543.57
10.55
0.42

KOSPI Composite

2,346.74
5.21
0.22

Taiwan Weighted

12,908.34
157.97
1.24
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