SENSEX SCALES 40K PEAK AGAIN

A mixed bag of earnings and hopes of lower taxes raise sentiments

The BSE Sensex rallied 220 points on Wednesday to reclaim the 40,000-mark for the first time since June 4, as strong corporate earnings and expectations of a rejig in tax structure for equity investors turbocharged sentiment.

Hopes of fresh tax reforms and lower interest rates in the US kept up the market tempo for the fourth straight day on Wednesday, with the benchmark Sensex closing above the 40,000 mark for the first time since June 4.

The 30-share BSE Sensex rose 220.03 points, or 0.55%, to 40,051.87, just 215.75 points shy of its record 40,267.62 on June 3. The 50-share Nifty gained 0.49% to 11,844.10.

A mixed bag of quarterly earnings performance and hopes of lower taxes raised hopes among investors.

Ajit Mishra, vice-president of research at Religare Broking said, “Indian indices continued their upward trend on the hopes of more tax sops for the equity markets from the government.” He said that in the near term, the market will be driven by corporate earnings and, thus, stockspecific volatility may remain high.

“Further, any favourable announcement from the government could help sustain the momentum ... In addition, other factors such as oil prices and currency movement may have a bearing on the markets.”

Foreign institutional investors (FIIs) have bought Indian shares worth $710.72 million in October after aggressively selling them following tax proposals in the Union budget that were later rolled back.

The budget had raised the surcharge on the ultra-rich that was also applicable to some FIIs. Year to date, FII investments net of selling in Indian markets are worth $8.87 billion.

Rahul Gupta, head of currency at Emkay Global Financial Services, said: “We expect the Fed to cut rates to 1.5-1.75% for the third consecutive time as the unsettled US-China trade war has started taking a toll on the US economic data. The rupee will continue to trade between 70.70-71.30 until we get more clarity over a US-China trade deal.”

“Market is positive on expectation of fresh reforms from the government and change in the long-term capital gain tax in the future. After a long time, market is seeing incentive to invest in equity due to reduction in taxation producing better than expected Q2FY20 results, providing a hope that earnings growth will revamp further in H2FY20. Results are adding fuel to the market despite weakness in other global markets,” said Vinod Nair, head of research, Geojit Financial Services.

“Markets from here on will be more stable on expectations of good December quarter earnings,” said Siddharth Sedani, head of equity advisory at Anand Rathi Financial Services Ltd in Mumbai. “Strong set of numbers from some firms like ICICI (Bank), Tata Motors and State Bank of India have helped improve sentiment.”

Domestic institutional investors have been net buyers of shares worth ₹51,590.33 crore so far this year, including ₹5,380.49 crore bought in October.

The rupee on Wednesday ended at 70.90, down 0.07% from the previous close.

Agencies contributed to this story.

FOREIGN INSTITUTIONAL INVESTORS BOUGHT INDIAN SHARES WORTH $710.72 MN IN OCTOBER AFTER SELLING THEM FOLLOWING THE BUDGET