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Indian equity benchmarks made a strong comeback on Monday after three days of losses, due to strong momentum in global markets, favourable domestic economic data and good Q2 results announcement. After opening in the green, benchmark indices continued to gain momentum. Traders took encouragement as the Reserve Bank of India (RBI) said that retail -- covering housing and vehicles, credit cards, etc -- showed an accelerated growth rate of 12.1 per cent in September 2021 against 8.4 per cent in September 2020. Sentiments remained positive with a private survey stating that manufacturing activity in India gained steam in October as companies scaled up production in line with a substantial upturn in new work intakes. Similarly, factory output increased at a sharp pace that was the strongest since March. At 55.9 in October, vs 53.7 in September, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index was in expansion territory for the fourth month in a row in October, pointing to the strongest improvement in overall operating conditions since February.

Traders remained energized after the finance ministry stating that Goods and Services Tax (GST) collection remained above Rs 1 lakh crore for the fourth month in a row at over Rs 1.30 lakh crore in October, indicating the impact of festive buying. This is the second highest collection of GST since its implementation on July 1, 2017. The tax collections last month on goods sold and services rendered was 24 per cent higher than in October 2020. Additional support also came with data showing that the growth of eight core infrastructure industries grew by 4.4 percent in September 2021 as compared to same month last year on account of healthy performance by segments like natural gas, refinery products and cement. Though, it fell as compared to 11.5 per cent in the previous month. Meanwhile, government data showed India's federal fiscal deficit during April-September, the first half of the current fiscal year, stood at 5.27 trillion rupees ($70.4 billion) or 35% of the budgeted target for the whole year.

On the global front, Asian markets were trading mixed, as a private survey showed Chinese manufacturing activity growth in October expanded with the Caixin/Markit manufacturing PMI coming in at 50.6. Investors also cheered data showing that the manufacturing sector in Japan expanded at a faster pace in October. Traders are also reluctant to make significant bets ahead of the Federal Reserve's monetary policy meeting this week. European markets were trading higher with earnings optimism, the ruling party's solid victory in Japan's parliamentary election, easing travel curbs in Australia and Thailand, and stabilizing coal prices in China boosting sentiment. Back home, on the sectoral front, stocks related to power sector remained in focus with data showing that India's power consumption grew 4.8 per cent in October to 114.37 billion units (BU), indicating a good recovery amid coal shortages at electricity generation plants. Banking stocks too were in focus with report that public sector banks will implement common staff accountability policies for loan accounts up to Rs 50 crore, excluding fraud accounts, turning into non-performing assets (NPAs) on or after April 1, 2022.

Finally, the BSE Sensex rose 831.53 points or 1.40% to 60,138.46 and the CNX Nifty was up by 258.00 points or 1.46% to 17,929.65.          

The BSE Sensex touched high and low of 60,220.21 and 59,355.12, respectively and there were 26 stocks advancing against 4 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 1.75%, while Small cap index was up by 1.11%.

The top gaining sectoral indices on the BSE were Realty up by 3.56%, Telecom up by 3.33%, Metal up by 3.27%, TECK up by 2.42%, IT up by 2.21%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Indusind Bank up by 7.46%, Bharti Airtel up by 4.04%, HCL Technologies up by 3.75%, Tata Steel up by 3.34% and Tech Mahindra up by 3.10%. On the flip side, Bajaj Finserv down by 1.74%, Mahindra & Mahindra down by 1.50%, Nestle down by 0.60% and Reliance Industries down by 0.03% were the top losers.

Meanwhile, Controller General of Accounts (CGA) in its latest data showed that the union government’s fiscal deficit has worked out to be Rs 5.26 lakh crore or 35 per cent of the budget estimates at the end of September 2021. The deficit figures in the current fiscal appear much better than the previous financial year when it had soared to 114.8 per cent of the estimates mainly on account of a jump in expenditure to deal with the COVID-19 pandemic.

The CGA said in absolute terms, the fiscal deficit or gap between expenditure and revenue was Rs 5,26,851 crore at end of September. For the current financial year, the government expects the deficit at 6.8 per cent of GDP or Rs 15,06,812 crore. As per the data, the central government’s total receipts stood at Rs 10.99 lakh crore or 55.6 per cent of corresponding budget estimates (BE) 2021-22 up to September, 2021. The total receipts were 25.2 per cent of the BE of 2020-21 during the corresponding period of last financial year.

Of the total receipts, the tax revenue was Rs 9.2 lakh crore or 59.6 per cent of BE. The tax revenue was only 28 per cent of BE of 2020-21 in the year ago period. The CGA data further said central government’s total expenditure at the end of the first half of the fiscal year stood at Rs 16.26 lakh crore or 46.7 per cent of current fiscal’s BE. Of the total expenditure, out of Rs 13,96,666 crore was on revenue account and Rs 2,29,351 crore was on capital account. Out of the total revenue expenditure, Rs 3,63,757 crore was on account of interest payments and Rs 1,80,959 crore is on account of major subsidies. The fiscal deficit for 2020-21 was 9.3 per cent of the gross domestic product (GDP), better than 9.5 per cent projected in the revised estimates in the budget in February.

The CNX Nifty traded in a range of 17,954.10 and 17,697.10 and there were 46 stocks advancing against 4 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 7.52%, Hindalco up by 4.47%, Bharti Airtel up by 4.21%, HCL Technologies up by 3.96% and Grasim Industries up by 3.71 On the flip side, UPL down by 2.63%, Bajaj Finserv down by 1.61%, Mahindra & Mahindra down by 1.44%, Nestle down by 0.44% and Reliance Industries down by 0.07% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 39.59 points or 0.55% to 7,277.16, France’s CAC increased 65.79 points or 0.96% to 6,896.13 and Germany’s DAX increased 137.41 points or 0.88% to 15,826.18.

Asian markets settled mixed on Monday as investors avoided big bets ahead of major global central bank meetings later this week for signals on their rates policy outlook, while the US central bank Fed is expected to announce it would start tapering bond purchases at the end of its two-day meeting on Wednesday. Chinese shares ended almost flat with negative momentum as activity in China’s services sector grew at a slower pace in October as China combats Covid-19 outbreaks hitting mainly the north, while the monthly PMI by Caixin suggested that manufacturing activity grew in October compared to the previous month as demand recovered. Seoul shares gained amid strong exports in October, while Korean won declined against the US dollar. Japanese shares rose after data showing that the manufacturing sector in Japan expanded at a faster pace in October, while expectations of more fiscal stimulus in Japan after Prime Minister Fumio Kishida’s Liberal Democratic Party held on to a majority in a parliamentary election too kept the market sentiments bullish.

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