Domestic shares rallied on Tuesday on reports that the government is mulling over changes in income tax implications on equity investment. Optimism over US-China trade deal and the European Union extending Brexit deadline to 31 January 2020, also triggered buying.
The barometer index, the BSE Sensex, jumped 581.64 points or 1.48% to 39,831.84. The Nifty 50 index also soared 159.70 points or 1.37% to 11,786.85.
The media reported that existing structures of long-term capital gains (LTCG) tax, the securities transaction tax (STT) and dividend distribution tax (DTT) are being reviewed by the Prime Minister's Office in consultation with the Finance Ministry's Revenue Department and NITI Aayog. The steps are likely to be announced before or in the February Union Budget.
The market breadth was positive. On the BSE, 1435 shares rose and 1029 shares fell. A total of 213 shares were unchanged.
The BSE Mid-Cap index rose 1.12% and the BSE Small-Cap index rose 0.55%. Both these indices underperformed the Sensex.
Among the sectoral indices on the BSE, the S&P BSE Auto index (up 4.25%), the S&P BSE Metal index (up 4.19%) and the S&P BSE Energy index (up 1.99%) outperformed the S&P BSE Sensex.
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The S&P BSE Telecom index (down 4.33%), the S&P BSE Power index (up 0.33%) and the S&P BSE FMCG index (up 0.55%) underperformed the S&P BSE Sensex.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 70.88, compared with its close of 70.90 during the previous trading session.
In the commodities market, Brent crude for December 2019 settlement was down 59 cents at $60.98 a barrel. The contract fell 40 cents or 0.65% to settle at $61.59 a barrel during the previous trading session.
In the overseas market, European shares declined while Asian shares ended mixed as traders continued to monitor the progress in U.S.-China trade discussions.
The Office of the U.S. Trade Representative said Monday that Washington will consider extending certain tariff exclusions on $34 billion worth of imports from China. The USTR said last week that China and the U.S. are close to finalizing a phase one deal.
U.S. President Donald Trump reportedly said the deal with China is expected to be signed 'ahead of schedule,' but did not elaborate on the timing. Chinese state-run news agency Xinhua also pointed to progress being made on trade.
In Europe, traders expected a fresh push from U.K. Prime Minister Boris Johnson for an early general election. Johnson on Monday lost his third bid to force a general election on December 12 after falling short of the two thirds majority needed in Parliament, but will now attempt to introduce a bill requiring a simple majority. He would still need support from some opposition party lawmakers for the bill to pass.
The push for early polls comes after Johnson accepted the EU's three-month extension to the U.K.'s Brexit deadline, pushing the departure date to January 31.
In the US market, the S&P 500 hit a record high on Monday as investors cheered strong earnings and progress on US-China trade. Microsoft shares contributed to Monday's gains on news the company won a $10 billion cloud contract from the Defense Department.
Meanwhile, the US Federal Reserve begins its two-day policy meeting today, 29 October 2019 and interest rate decision will be announced on 30 October 2019. A third consecutive interest rate cut of 25 basis points is widely expected, as the central bank attempts to avert a slowdown that has gripped much of the developed world.
On the equity front back home, index heavyweight Reliance Industries (RIL) rose 2.30% to Rs 1467.10 after hitting a 52-week high of Rs 1480.40 in intraday.
The board of directors of RIL approved the formation of a wholly-owned subsidiary (WOS) for digital platform initiatives and investment of Rs 1,08,000 crore in the WOS through OCPS. The WOS will also acquire RIL's equity investment of Rs 65,000 crore in Reliance Jio Infocomm (RJIL). Consequent to the above, RJIL will become virtually net debt free company by 31st March 2020, with exception of spectrum related liabilities.
Metal stocks were in demand as chances of an early US-China deal on trade brightened. Tata Steel (up 7.09%), JSW Steel (up 6.93%), Sail (up 5.12%), Jindal Steel & Power (up 4.9%), NMDC (up 4.71%), Vedanta (up 3.6%), Hindustan Copper (up 2.81%), Nalco (up 1.27%) and Hindalco Industries (up 1.04%) advanced.
Hindustan Zinc rose 1.64%. The company's net profit rose 14.66% to Rs 2081 crore while revenue from operations fell 5.23% to Rs 4,461 crore in Q2 September 2019 over Q2 September 2018. The company announced its Q2 earnings during market hours today.
Tata Motors advanced 16.63%, extending gains for the second day after announcing Q2 numbers. The stock is up about 36% in two trading sessions.
On consolidated basis, Tata Motors reported a consolidated net loss of Rs 227.62 crore in Q2 September 2019, lower than the consolidated net loss of Rs 873.27 crore in Q2 September 2018. Jaguar Land Rover (JLR) improved its performance this quarter and delivered a well-rounded performance. In particular, the improvement in China on the back of better operational metrics is reassuring, the firm said.
Mahindra & Mahindra (M&M) rose 3.36%. The auto major announced on Sunday, 27 October 2019, that its auto division delivered close to 13,500 vehicles across the country on the day of Dhanteras. This figure was substantially higher than the deliveries last year on Dhanteras.
Dhanteras, which was on Friday (25 October 2019), is the first day that marks the festival of Diwali in India. On this day, Hindus consider it as an auspicious day to make new purchases.
FMCG firm Marico tumbled 6.45% at Rs 366.40 as weakness in the domestic business dented sentiment. The stock tanked 7.16% in three trading sessions from a recent closing high of Rs 394.65 on 24 October 2019.
The company posted 16.5% rise in consolidated net profit to Rs 247 crore in Q2 September 2019 over Q2 September 2018. Its net sales during the quarter under review were down 0.44% to Rs 1,829 crore as against Rs 1837 crore in the corresponding quarter of the previous fiscal.
Revenue was almost flat on a YoY basis, with an underlying domestic volume growth of 1% and constant currency growth of 9% in the international business. The Q2 result was announced after trading hours on Friday, 25 October 2019.
In the backdrop of an accelerated slowdown in consumption witnessed during the quarter, Marico's domestic business clocked a turnover of Rs 1,398 crore, down 3% on a year-on-year basis. In Q2 September 2019, Marico's International business grew by 9% in constant currency terms to Rs 431 crore led by broad based growth in Bangladesh.
Adani Enterprises (AEL) surged 6.43%. AEL announced partnership with San Francisco-based Digital Realty to build India's data center infrastructure. According to the memorandum of understanding (MoU) signed between Adani Enterprises and Digital Realty, they will jointly evaluate developing and operating data centers, data center parks and cultivating undersea cable provider communities of interest across India.
Telecom shares were the biggest laggards today. Bharti Airtel fell 3.41% to Rs 359.95 while Vodafone Idea tumbled 8.11% to Rs 3.85. Bharti Infratel slumped 9.22% to Rs 192.95.
Bharti Airtel was to announce its Q2 results today, 29 October 2019. It, however, clarified before trading hours today that the result announcement has been deferred till 14 November 2019 as more clarity is needed on the adjusted gross revenue (AGR) matter arising out of recent judgement of the Supreme Court. The company is approaching DoT to seek clarity on the total amounts involved and request for their support to deal with this adverse outcome.
The Supreme Court has reportedly instructed telecom companies to deposit the dues sought by the government in three months in accordance with the court's Thursday order backing a broader definition of adjusted gross revenue (AGR). Vodafone Idea and Bharti Airtel are affected the most by the SC order with pending licence fee and spectrum usage charge (SUC) dues of Rs 39,000 crore and over Rs 41,000 crore, respectively.
Media reports suggested that Cabinet Secretary Rajiv Gauba headed Committee of Secretaries will review the financial stress on the telecom sector and examine all aspects and suggest measures to mitigate the same following the Supreme Court ruling on the AGR issue. A reference is being made to the telecom regulator to make viable pricing for voice and data tariff so as to curb further revenue erosion of the incumbents, the reports added.
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