The market ended with robust gains on Tuesday, supported by auto and metal shares. Media reports of a likely major tax tweak from the government boosted investor sentiment. 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, rose 581.64 points or 1.48% to 39,831.84, as per the provisional closing data. The Nifty 50 index rose 159.70 points or 1.37% to 11,786.85, as per the provisional closing data.
The S&P BSE Mid-Cap index rose 1.12% while the S&P BSE Small-Cap index rose 0.55%.
The market breadth was negative. On the BSE, 1436 shares rose and 1029 shares fell. A total of 212 shares were unchanged. In Nifty 50 index, 39 stocks advanced and 11 stocks declined.
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.
Meanwhile, Prime Minister Narendra Modi said on Tuesday Saudi Arabia will invest in downstream oil and gas projects in India as part of a strategic partnership between the two countries. Modi, who is on a two-day visit to Riyadh to participate in an investor summit, will meet King Salman bin Abdulaziz Al Saud and Crown Prince Mohammed bin Salman later on Tuesday.
On the equity front, Axis Bank (up 4.44%), Maruti Suzuki India (up 4.31%%), TCS (up 3.80%) and ICICI Bank (up 1.60%) edged higher.
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Reliance Industries (RIL) rose 2.97% to Rs 1476.75. The index heavyweight hit 52-week high today.
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. The S&P BSE Metal index was up 3.82% to 9,349.91, outperforming the benchmark Sensex.
Among the metal stocks, Tata Steel (up 6.12%), JSW Steel (up 6.11%), Jindal Steel & Power (up 6.06%), Steel Authority of India (up 4.55%), NMDC (up 4.05%), Vedanta (up 3.6%), Hindustan Copper (up 2.05%), Hindustan Zinc (up 1.84%), Hindalco Industries (up 1.26%) and National Aluminium Company (up 0.93%) advanced.
Telecom shares lagged the rally. Bharti Airtel fell 3.46% to Rs 359.75 while Vodafone Idea tumbled 10.02% to Rs 3.77.
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.
Adani Enterprises gained 5.51% to Rs 193.50. The company said it formed a strategic partnership with U.S. based Digital Realty for building India's Data Center Infrastructure. According to the MoU signed, Adani Enterprises and Digital Realty, will jointly evaluate developing and operating data centers, data center parks and cultivating undersea cable provider communities of interest across India.
Mahindra & Mahindra (M&M) rose 3.66% to Rs 611.10. 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.
Tata Motors advanced 16.15% to Rs 171.85, extending gains for the second day after announcing Q2 numbers. The stock is up 35.36% in two trading sessions to its current market price of Rs 167.25.
On consolidated basis, Tata Motors reported a consolidated net loss of Rs 227.62 crore in Q2 September 2019 over a 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. JLR generated pre-tax profits of 156 million in the quarter, 246 million better year-on-year. The improvement reflects favourable wholesale volume and mix, operating costs, depreciation and amortization, and foreign exchange. Profit margins were also significantly improved with an EBIT margin of 4.8% and an EBITDA margin of 13.8%.
Dr. Reddy's Laboratories added 0.72% to Rs 2806.40. The USFDA completed the audit of API Srikakulam plant in Andhra Pradesh on 25 October 2019 with 'four' Form 483 observations. The company assured that it will work comprehensively within the stipulated timeline.
Excel Industries rose 5.98% to Rs 964.90. The chemicals maker announced after market hours on Friday, 25 October 2019, that it successfully completed the acquisition of the chemical manufacturing unit of NetMatrix Crop Care located in Andhra Pradesh on 25 October 2019.
GVK Power hit an upper circuit of 5% after the company reported that three global firms have agreed to invest Rs 7,614 crore in the company's airport maintenance business. The company entered into definitive agreements with Abu Dhabi Investment Authority (ADIA), Public Sector
Pension Investment Board (PSP Investments) and National Investment & Infrastructure Fund (NIIF) for investing Rs 7,614 crore into GVK Airport Holdings. The company in an exchange filing further assured that proceeds from the transaction will be used to retire debt obligations of its holding companies and fund the purchase of additional shares in MIAL by GVKAHL from Bidvest.
FMCG major Marico tumbled 6.13% to Rs 367.65 as weakness in the domestic business dented sentiment.
FMCG major Marico 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.
Edelweiss Financial Services hit 5% upper circuit at Rs 89.50. Edelweiss announced that US-based Arthur J. Gallagher & Co. (Gallagher) has acquired a minority stake by way of primary equity infusion in Edelweiss Insurance Brokers (EIBL), post approval from the Insurance Regulatory and Development Authority of India (IRDAI). The latter is a subsidiary of Edelweiss Financial Services.
NTPC rose 0.55% to Rs 119.50. The electric power distribution company informed that it has entered into a joint venture & shareholders' agreement with the Ceylon Electricity Board for incorporation of 50:50 joint venture company for development of 300 MW 15% LNG power project at Kerawalapitiya, Sri Lanka.
Tata Coffee rose 4% to Rs 81.95 after the company announced a decent Q2 result on after market hours on Friday, 25 October 2019. On consolidated basis, the company's net profit rose 11.3% to Rs 40.13 crore on a 5.5% rise in net sales to Rs 481.23 crore on YoY basis. The company in an exchange filing stated that the Instant Coffee business, part of the Value-Added business segment, continued its good quarterly sales volume with all the geographies registering higher sales volume over the corresponding quarter of the previous year. However, the margins were under pressure due to the prevailing global environment.
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.
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.
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.
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.
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