Key gauges gain for second straight session
In a volatile session, Indian equity benchmarks rose for second straight session and settled with notable gains on Monday, with Sensex and Nifty recapturing their crucial 44,050 and 12,900 levels respectively. The benchmarks staged a gap up opening, amid sanguine global cues. Sentiments also got a boost with Industry body FICCI's latest quarterly survey on manufacturing showing that India's manufacturing sector is poised to witness recovery in the July-September quarter, even as hiring outlook for the segment remains bleak. The proportion of respondents reporting higher output during July-September rose to 24 per cent, as compared to 10 per cent in the previous quarter. Some support also came as a senior official of the Ministry of External Affairs said that Atmanirbhar Bharat provides a vision of India's plans to become a $5 trillion economy by promoting 'Make in India - Make for World' and this will happen through an integration with the global economy.
However, volatility witnessed in late morning session as the benchmarks erased initial gains, as investors' feared about government imposing lockdowns again to curb the spread of Covid-19 which has been spreading at a faster pace in cities like Delhi. There was some cautiousness too with report that as many as 437 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns of over Rs 4.37 lakh crore. But, buying in index heavyweights like ONGC, Indusind Bank and Infosys helped benchmarks recover and close higher. Adding to the optimism, Fitch Ratings said the government's coronavirus pandemic-driven renewed reform agenda has the potential to raise India's medium-term growth rate. It also noted that raising medium-term growth rates under these circumstances will require reforms to support investment and boost productivity and it will take time to assess whether the reforms are implemented effectively.
On the global front, Asian markets ended higher on Monday, as hopes for imminent coronavirus vaccines helped investors shrug off reports of renewed lockdowns in several countries. Besides, the latest survey from Markit Economics showed the manufacturing sector in Australia continued to expand in November, and at a faster rate, with a Manufacturing PMI score of 56.1, up from 54.2 in October. The survey also showed that the services index rose to 54.9 from 53.8, while the composite index came in at 54.7 - up from 53.6 a month earlier. European markets were trading higher even as the preliminary report from IHS/Markit Research showed the Eurozone manufacturing purchasing managers index (PMI) fell to a three-month low level of 53.6 in November from 54.8 in October. The Services PMI dropped to a six-month low level of 41.3. An early flash’ reading of the IHS Markit/CIPS UK Composite Purchasing Managers' Index (PMI) dropped to a five-month low of 47.4 in November from 52.1 in October.
Finally, the BSE Sensex rose 194.90 points or 0.44% to 44,077.15, while the CNX Nifty was up by 67.40 points or 0.52% to 12,926.45.
The BSE Sensex touched high and low of 44,271.15 and 43,747.22, respectively and there were 20 stocks advancing against 10 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index rose 1.25%, while Small cap index was up by 1.37%.
The top gaining sectoral indices on the BSE were IT up by 2.89%, Oil & Gas up by 2.68%, Energy up by 2.61%, TECK up by 2.31%, Healthcare up by 1.72% while, Telecom down by 0.87%, Bankex down by 0.77%, Finance down by 0.70% were the top losing indices on BSE.
The top gainers on the Sensex were ONGC up by 6.84%, Indusind Bank up by 4.79%, Infosys up by 3.37%, Tech Mahindra up by 3.33% and Bajaj Finserv up by 2.78%. On the flip side, HDFC down by 3.55%, ICICI Bank down by 2.48%, Axis Bank down by 1.99%, SBI down by 1.69% and Mahindra & Mahindra down by 1.50% were the top losers.
Meanwhile, Fitch Ratings has said that the government's coronavirus pandemic-driven renewed reform agenda has the potential to raise India's medium-term growth rate. Nevertheless, it said there are also downside pressures to growth and it will take time to assess whether the reforms are implemented effectively. It also noted that raising medium-term growth rates under these circumstances will require reforms to support investment and boost productivity and it will take time to assess whether the reforms are implemented effectively.
According to Fitch, the pandemic will slow medium-term growth, as damaged corporate balance sheets are expected to dampen investment for years. It pointed out that renewed asset-quality challenges in banks and generally fragile liquidity for non-bank financial companies could also constrain growth prospects and jeopardise the stability of the medium-term government debt/GDP trajectory. It stated that several reforms passed by Parliament since the pandemic set in, could lift medium-term growth prospects, including the agricultural reforms to give farmers more flexibility over where to sell their produce. It added that stripping out middle men, as the reform allows, could improve farmer incomes while reducing consumer prices.
It further said the government also intends to privatise some state-owned enterprises, of which more than 200 are owned by the central government and 800 by state governments. It said a wide-ranging privatisation push could be transformative. It also said the process of reforms in India remains especially complex and implementation at times has proven difficult.
The CNX Nifty traded in a range of 12,968.85 and 12,825.70 and there were 36 stocks advancing against 14 stocks declining on the index.
The top gainers on Nifty were ONGC up by 6.63%, Indusind Bank up by 3.79%, GAIL India up by 3.54%, Dr. Reddys Lab up by 3.51% and Infosys up by 3.19%. On the flip side, HDFC down by 3.50%, ICICI Bank down by 2.48%, Axis Bank down by 1.79%, SBI Life Insurance down by 1.75% and Titan Company down by 1.73% were the top losers.
European markets were trading higher; UK’s FTSE 100 increased 15.09 points or 0.24% to 6,366.54, France’s CAC rose 32.04 points or 0.58% to 5,527.93 and Germany’s DAX was up by 103.76 points or 0.79% to 13,241.01.
Asian markets ended higher on Monday as optimism around progress in Covid-19 vaccine trials shrugged off reports of renewed lockdowns in several countries. Chinese shares ended up after the country's financial regulators vowed to adopt a zero-tolerance approach for misconduct following a recent string of bond defaults, and will punish all kinds of debt evasion to protect investors. Further, South Korean shares climbed after data showed that South Korea's exports rose 11.1% YoY in the first 20 days of November, with outbound shipments of memory chips soaring 21.9% over the cited period. Markets in Japan were closed for the Labor Thanksgiving Day.
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