Markets cheer up post Diwali on stimulus hopes
FAVOURABLE CUES Likely Us-china deal, encouraging results boost sentiments
MUMBAI: The Indian stock market began the post-diwali session with a bang on Tuesday, with the benchmark Sensex surging 582 points to close at a near fourmonth high on hopes of more economic stimulus measures and income tax cuts.
Starting the first full session of Samvat 2076 on a bullish note, the 30-share Sensex soared over 666 points, before settling 581.64 points, or 1.48%, higher at 39,831.84. It hit an intraday high of 39,917.01 and a low of 39,254.12.
Likewise, the broader NSE Nifty rallied 159.70 points, or 1.37%, to close at 11,786.85.
Bourses saw a broad-based buying throughout the day as sentiment was further boosted by encouraging quarterly corporate earnings and Us-china trade deal optimism.
On the Sensex chart, Tata Motors emerged as a standout performer, surging about 17% after the company reported narrowing of losses in the September quarter.
Other major gainers were Tata Steel, Yes bank, Axis Bank, Maruti Suzuki, Tech Mahindra and Tata Consultancy Services, rising as much as 7.09%.
Shares of Reliance Industries Ltd (RIL) also ended 2.30% higher after the company on Friday said it will set up a new subsidiary to bring all its digital initiatives and apps under a single entity, and infuse ₹1.08 lakh crore equity into this new unit.
Sectorally, BSE auto and metal indices rallied up to 4.25%; followed by energy, industrials and IT indices, rising up to 2.32%.
On the other hand, BSE telecom index was the only sectoral loser, 4.39%.
Broader BSE midcap and smallcap indices too rose up to 1.12%.
Of the 23 Nifty companies that have announced results so far, 17 have either beaten or matched analyst estimates, while one didn’t have any estimates.
“Markets are surging towards all-time highs amid expectations of further stimulus measures and income tax cuts as well. Besides, the Q2 earning numbers from large-cap companies have been better than expectations so far, with no major negative surprises,” Paras Bothra, president of equity research, Ashika Stock Broking, said.
Analysts said that the surge in the auto companies, post severe correction in the past one year, is driven by revival in volume sales this festive season along with hope of a possible rationalization of personal income tax by the government to boost consumption.
Early signs of improving in consumer spending in the festive season, the government’s focus on stimulating the economy along with favourable global cues have taken the benchmark indices to four-month high level today.
The result season has also been fairly decent this time around and is not likely to result in any material downgrade in earnings estimates at Sensex/ Nifty level.
Optimism over Us-china trade deal and delay over Brexit decision till January likely to remove uncertainties in the medium term, he added.
Elsewhere in Asia, Shanghai, Hong Kong and Seoul ended on a negative note, while Tokyo closed in the green.
Europe was trading in the red in early deals.
Meanwhile, the Indian rupee closed with marginal gains at 70.84 against the US dollar.
Brent crude futures, the global oil benchmark, fell 0.97% to $60.97 per barrel.
“If FDI (foreign direct investment) rules are eased for the cause of disinvestment in stateowned companies like Air India, that will be very encouraging for the stock market,“said Sudip Bandyopadhyay, who oversees investments at Inditrade Capital Ltd in Mumbai.