Indian stocks hit record closing highs on COVID-19 vaccine hopes
Indian shares hit record closing highs on Tuesday following their best monthly gain since April as hopes for a COVID-19 vaccine boosted bets for a quicker economic recovery. The sentiments were also boosted ater a government data showed a smaller than expected contraction in Asia’s third-largest economy.
Breakthroughs in developments for a vaccine had driven markets across the world sharply higher in November, with India’s main stock indexes too climbing over 11% each on the back of record inflows from foreign institutional investors.
The domestic market extended gains on Tuesday ater data released late on Friday showed India’s economy contracted by 7.5% in the September quarter, versus an 8.8% contraction expected in a Reuters poll, amid signs of a pick-up in manufacturing.
The NSE Nity 50 index closed up 140.10 points or 1.08% at 13,109.05, while the benchmark S&P BSE Sensex climbed 505.72 points or 1.15% to 44,655.44. Indian markets were closed on Monday for a holiday.
Investors looked past a survey released earlier in the day showing India’s manufacturing recovery faltered in November as virus fears weighed on demand and output.
In Mumbai, heavyweight IT firm Infosys was the biggest boost to the indexes, rising 3.4%. Large private-sector lender ICICI Bank jumped 2.5%.
The Nity Auto Index ended 1.1% higher ater a handful of automakers reported monthly sales figures. Bajaj Auto advanced 2.2% ater reporting a near 5% rise in sales for November.
The Nity PSU Banking Index, which tracks state-run lenders, was among the best performers, closing 2.9% higher at its best level since late August. India’s most valuable company Reliance Industries rose 1.3%.
European peers also made a positive start to the month following a record-breaking November and US futures were higher ater a drop on Monday, while MSCI’S broadest index of Asia-pacific shares outside Japan climbed ater robust China data.
The rupee strengthened on Tuesday on the back of weakness in the dollar index and heavy inflow of foreign institutional investments (FIIS).
The rupee was traded at Rs73.84 per dollar against its previous close of Rs74.05 per dollar. It had opened at Rs73.95 per dollar.
On Friday, the Indian currency snapped its five-day gaining streak and setled by appreciating 17 paise at Rs74.05 against the greenback.
The GDP data for the July-september showed beter than anticipated narrowing of the contraction in GDP, which has boosted the market participants on Tuesday.
The National Statistical Office ( NSO) data on Friday showed that the Q2FY21 GDP on a year-on-year basis contracted by 7.5 per cent from 23.9 per cent contraction in the preceding quarter.
The recent inflow of FIIS has also boosted investor sentiments. FIIS were net positive in November with net purchasing of over Rs65,000 crore, the highest monthly inflow ever.
The Indian equity market witnessed a significant dichotomy in November as the domestic institutional investments (DII) logged the highest ouflow of funds at $5.9 billion, although net foreign institutional investments (FII) purchase touched an all-time high for any month ever.
“November 20 witnessed a dichotomy in flows between FII and DII. FII inflows were at the highest levels at $8.3 billion, while DII sustained the highest net ouflows of $5.9 billion,” said a report by Motilal Oswal Institutional Equities.
The report further noted that Nity50’s market-cap continues to trade at all-time highs.
Nity m-cap is 13 per cent above December 2019 levels. However, Nity Mid-cap 100’s market cap is still down 12 per cent from the peak, although it is above December 2019 levels.
It noted that 45 of Nity50 stocks gained last month. So far in 2020, 31 Nity stocks have delivered positive returns, said the report.
Further, 182 of BSE-200 constituents gained in November 2020, with 116 stocks posting over 10 per cent gains MOM, leading to a broadbased rally.
So far in 2020, around 120 of BSE-200 constituents posted positive returns, with 45 stocks returning over 30 per cent.
Meanwhile, gross GST revenue collection in November stood at nearly Rs1.05 lakh crore, an official statement said on Tuesday.
The revenues for the month of November 2020 were 1.4 per cent higher than the GST revenues in the same month last year.
During the month, revenues from import of goods was 4.9 per cent higher and the revenues from domestic transaction, including import of services, are 0.5 per cent higher that the revenues from these sources during the same month last year.
Sentiments are also lited by a government data showing smaller than expected contraction in Asia’s third-largest economy