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Published on 24/01/2020 5:06:23 PM | Source: LKP Securities Ltd

Bourses Sustain Robust Gaining Rally On Friday - LKP Securities

Posted in Market Outlook| #Market Outlook #LKP Securities Ltd

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Bourses Sustain Robust Gaining Rally On Friday

Indian equity bourses sustained their gaining rally on Friday, with Sensex & Nifty ending higher by around 0.55% each. The start of the day was on a cautious note, amid a private report that government's tax revenue shortfall for FY20 is estimated to be at around Rs 2 lakh crore. The revenue shortfall from direct tax sources is being pegged at around Rs 1.5 lakh crore to Rs 1.8 lakh crore, while that from indirect sources is estimated to be at around Rs 30,000 crore to Rs 60,000 crore. But soon, indices staged sharp recovery, as RBI raised the investment limit for foreign portfolio investors in government & corporate bonds.

Key benchmarks remained in green terrain with strong gains for the most part of the trading session, on the back of firm cues from the global markets. Traders got encouragement, with  a private report stating that deal activity by private venture investors grew by 28 per cent to $48 billion in 2019, propelled by infrastructure bets, but will slow down to under 20 per cent in 2020. Some support also came with reports that the government think-tank Niti Aayog will develop a national data and analytics platform to make all government data accessible to stakeholders in a user-friendly manner.

On the global front, European markets were trading in green terrain, after the euro area private sector grew at the same moderate pace as seen in the final month of 2019. The survey data from IHS Markit showed that the composite output index held steady at 50.9 in January. Asian markets ended mostly higher, as Japan's private sector rebounded at the start of 2020, driven by the expansion in services output. The flash survey results from IHS Markit showed that the Jibun Bank flash composite output index rose to 51.1 in January from 48.6 in December. A score above the neutral 50 indicates expansion.

Back home, Auto stocks ended higher, even after credit rating agency, ICRA said that demand for two-wheelers in the domestic market is likely to remain weak in the near-term on the back of implementation of BS-VI norms. Further, Oil & Gas sector stocks remained in focus, as Oil Minister Dharmendra Pradhan said that India will see an investment of over Rs 4 lakh crore in development of gas supply and distribution infrastructure in the next five years as it chases the target of more than doubling the share of the environment-friendly fuel in its energy basket to 15 percent by 2030.

Finally, the BSE Sensex gained 226.79 points or 0.55% to 41,613.19, while the CNX Nifty was up by 67.90 points or 0.56% to 12,248.25.

The BSE Sensex touched high and low of 41,697.03 and 41,275.60, respectively and there were 22 stocks advancing against 08 stocks declining.

The broader indices ended in green; the BSE Mid cap index rose 0.77%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.50%, Consumer Durables up by 1.33%, Basic Materials up by 1.04%, Metal up by 0.98% and Industrials up by 0.96%, while Energy down by 0.14% and Oil & Gas down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.47%, Tech Mahindra up by 2.43%, Larsen & Toubro up by 2.03%, Axis Bank up by 2.01% and Kotak Mahindra Bank up by 1.98%. On the flip side, Power Grid down by 2.14%, Indusind Bank down by 1.21%, Sun Pharma down by 0.49%, TCS down by 0.40% and Reliance Industries down by 0.35% were the top losers.

Meanwhile, union minister Piyush Goyal has asserted that the Indian economy is well-poised to take off and the government is committed to ensure economic growth. He noted that there is a lot of enthusiasm for making investments in the country. He said ‘Britain is set to leave the European Union by the end of January.... things have once again started showing an uptrend... economy is well poised to take off from here.’

Talking on Regional Comprehensive Economic Partnership (RCEP), the minister said it was an unbalanced trade agreement, which was really not fulfilling the guiding principles on which RCEP started about eight years ago, therefore India chose not to participate in it. He also said ‘out of the RCEP countries India already has bilateral trade agreements with ASEAN 10 with Japan and Korea, we are close to concluding negotiations with Australia which we have restarted now and in the next 6 to 8 months we are can close a bilateral trade partnership with Australia.’

Goyal further said ‘RCEP was effectively becoming a free trade agreement between China and India. I don’t think India is ready to engage unless we see open government, better transparency, regulatory practices being followed, and greater market access for Indian goods and services on a reciprocal basis.’

The CNX Nifty traded in a range of 12,272.15 and 12,149.65. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 3.91%, Ultratech Cement up by 2.58%, Britannia up by 2.44%, Tech Mahindra up by 2.33% and Axis Bank up by 2.21%. On the flip side, Power Grid down by 2.45%, Cipla down by 1.38%, Indusind Bank down by 1.06%, Tata Motors down by 0.80% and BPCL down by 0.64% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 107.91 points or 1.44% to 7,615.58, France’s CAC rose 83.95 points or 1.41% to 6,055.74 and Germany’s DAX was up by 175.82 points or 1.31% to 13,564.24.

Asian markets ended mostly higher on Friday after the World Health Organization (WHO) announced it was a bit too early to declare the coronavirus a global health emergency. The death toll in China has now risen to 26, while the number of confirmed cases jumped to 830. Multiple cases of the virus have been confirmed in Thailand, Vietnam, South Korea and Japan, while the United States, Taiwan and Singapore have each reported one case. Japanese shares closed higher after the release of macroeconomic data. Japan's inflation accelerated in December but remained well below the 2 percent target, a government report showed. Consumer price inflation increased to 0.8 percent from 0.5 percent a month ago and against forecast of 0.7 percent. While, flash survey results from IHS Markit revealed that Japan's private sector rebounded at the start of 2020, driven by the expansion in services output. The corresponding index rose to 51.1 in January from 48.6 in December. The services PMI advanced to 52.1 from 49.4 a month ago. The factory PMI also climbed in the month but held below 50. Moreover, Hong Kong shares ended slightly higher in a shortened trading session ahead of the Year of the Rat. Meanwhile, markets in China, South Korea and Taiwan were closed for the Lunar New Year holidays.

 

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