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Benchmarks end at record closing highs

Indian equity benchmarks trimmed most of their initial gains but managed to end at record closing highs on Friday, with Sensex closing above the 60,000 mark for the first time and Nifty ending above important level of 17,850. Decline in covid cases, rising vaccination and improvement in the economic environment of the country is fuelling the current bull run in the equity markets. Markets made optimistic start and traded in green throughout the session, taking support from union Minister Piyush Goyal’s statement that the commerce ministry is trying to ease norms for Special Economic Zones (SEZs) and make it simpler for units to exit these areas. The ministry is also looking at ways for partial de-recognition of existing SEZs so that areas which have no more demand can be used for industrial or other purposes. Solace also came with private report stating that with higher consumer confidence following the rise in vaccination levels and sitting on already-built-up-savings through the pandemic months, the top 20 per cent of upper-income consumers will help recover the near-term consumption demand. These consumers account for the bulk of the rural and urban demand.

Sentiments remained positive in the noon session, taking support from former deputy chairman of erstwhile Planning Commission Montek Singh Ahluwalia’s statement that the Indian economy has bottomed out and the formal sector is likely to get back to pre-pandemic levels by the end of this year. He is in favor of the National Monetisation Pipeline (NMP) that will look to unlock value in infrastructure assets across sectors ranging from power to road and railways. Adding to the optimism, Union Road Transport and Highways Minister Nitin Gadkari said India is becoming a global investment destination and the government is committed to providing a favourable policy framework. However, markets cut most of gains in final hour of trading session, as some cautiousness came with the Centre for Monitoring Indian Economy (CMIE) stating that the recovery in employment after the pandemic-induced disruptions has been uneven, with job losses being concentrated among salaried employees and entrepreneurs.

On the global front, Asian markets settled mostly lower on Friday as no tangible progress was noted on the Evergrande scenario and no clarifications were forthcoming form the company on the payment of coupon on the debt-ridden company's dollar denominated bonds. European markets were trading lower as caution stemming from the unresolved Evergande debt scenario and potential spillover risks reverberated in trading sentiment. Back home, banking stocks were in focus as RBI data showed Bank deposits grew 11.9 per cent year-on-year during 2020-21 compared to 8.8 per cent in 2019-20 on the back of high growth in current account and savings account (CASA) deposits. There was some reaction in insurance industry stocks as a senior Irdai member said Insurance Regulatory and Development Authority of India (Irdai) has no plans to bring standard products for cyber liability insurance policy as of now.

Finally, the BSE Sensex rose 163.11 points or 0.27% to 60,048.47 and the CNX Nifty was up by 30.25 points or 0.17% to 17,853.20.    

The BSE Sensex touched high and low of 60,333.00 and 59,946.55, respectively and there were 13 stocks advancing against 17 stocks declining on the index.    

The broader indices ended in red; the BSE Mid cap index fell 1.16%, while Small cap index was down by 0.30%.

The top gaining sectoral indices on the BSE were Telecom up by 2.77%, Realty up by 1.69%, TECK up by 1.08%, IT up by 0.85% and Consumer Discretionary up by 0.44%, while Metal down by 2.31%, Healthcare down by 1.40%, PSU down by 1.33%, Basic Materials down by 1.10% and FMCG down by 1.06% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 3.72%, Mahindra & Mahindra up by 2.74%, HCL Technologies up by 2.24%, HDFC Bank up by 1.98% and Bharti Airtel up by 1.79%. On the flip side, Tata Steel down by 3.60%, SBI down by 2.00%, Axis Bank down by 1.74%, ITC down by 1.67% and Hindustan Unilever down by 1.44% were the top losers.

Meanwhile, Union Minister Piyush Goyal has said the commerce ministry is trying to ease norms for Special Economic Zones (SEZs) and make it simpler for units to exit these areas. The ministry is also looking at ways for partial de-recognition of existing SEZs so that areas which have no more demand can be used for industrial or other purposes.

He said ‘There are a large amount of areas lying across SEZs in the country. Now that the sunset clause (for SEZ tax incentives) has set in, probably we may not find enough traction for new people to set up units within SEZ, so we are trying to ease the system of SEZs going forward and make it easier for people to exit from the SEZ status.’

He also said different issues raised by exporters are under consideration of the government. Citing an example, he said the ministry is discussing with its finance counterpart the issues of allowing e-commerce seamlessly for artificial jewellery up to a value of USD 800 and depreciation of second hand goods. He added ‘We are also discussing how the SEZs can play a more important role in the DTA (domestic tariff area) through an equalisation levy.’

The CNX Nifty traded in a range of 17,947.65 and 17,819.40 and there were 20 stocks advancing against 30 stocks declining on the index.      

The top gainers on Nifty were Asian Paints up by 3.74%, Eicher Motors up by 3.08%, Mahindra & Mahindra up by 2.97%, HCL Technologies up by 2.37% and Bharti Airtel up by 2.22%. On the flip side, Tata Steel down by 3.92%, JSW Steel down by 2.58%, SBI down by 2.03%, Divi's Lab down by 2.00% and Shree Cement down by 1.97% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 13.95 points or 0.2% to 7,064.40, France’s CAC fell 58.30 points or 0.87% to 6,643.68 and Germany’s DAX was down by 104.61 points or 0.67% to 15,539.36.

Asian markets settled mostly lower on Friday on uncertainty over whether property developer China Evergrande Group will pay the interest that was due Thursday on a dollar-denominated bond. Meanwhile, the US central bank (Fed) said it would begin tapering its stimulus programme as soon as November and complete the process by mid-2022. The Fed also signalled interest rate hikes may follow more quickly than expected as its turn from pandemic crisis policies gains momentum. Chinese shares declined amid concerns over a missed bond payment by developer China Evergrande Group, although the Chinese central bank PBoC continued its liquidity infusion to support the country’s financial markets and the economy. However, Japanese shares ended higher tracking positive cues from Wall Street overnight.

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