Key indices advanced for third straight trading sessions on Wednesday. After a shaky start, the equity benchmarks turned volatile and hit the day's low by noon. The indices, however, bounced back and ended near the high point of the day. The Nifty managed to end above the 12,000 level.
The barometer BSE S&P Sensex rose 353.28 points or 0.87% to 41,142.66. The Nifty 50 index added 110.60 points or 0.94% to 12,090.25.
The sentiment got a boost after India's Services PMI in January rose at quickest rates in seven years. Positive global shares also supported buying. Investors, however, remained cautious ahead of the Reserve Bank of India (RBI)'s policy outcome tomorrow.
The BSE Mid-Cap index rose 1.35% and the BSE Small-Cap index was up by 0.74%.
The market breadth was positive. On the BSE, 1320 shares rose and 1143 shares fell. A total of 197 shares were unchanged.
The Sensex climbed 1407.13 points, or 3.54% and the Nifty rose 428.40 points, or 3.67% in the past three sessions.
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Economy:
The Reserve Bank of India (RBI)'s monetary policy committee (MPC) began its sixth bi-monthly monetary policy meeting on Tuesday (4 February). It will conclude on Thursday (6 February). The resolution of the MPC will be placed on the RBI website at 11:45 IST on 6 February 2020.
Meanwhile, the IHS Markit India Services Business Activity jumped to 55.5 in January from 53.3 in December, signalling the strongest upturn in output for seven years. The rebound largely stemmed from favourable market conditions and better underlying demand. A reading below 50 indicates contraction in activity, while a number above it signals expansion.
"The Indian service sector sprung to life at the start of 2020, defying expectations of fragility and building on to the momentum gained at the end of 2019. Strong domestic demand led to expansions in new business and output not seen for seven years. With business revenues rising, service providers continued to increase capacity to meet further strong growth in sales. This is good news for jobseekers, particularly when we consider the results from the manufacturing industry which showed the steepest upturn in employment since August 2012. One worrying development, however, was the trend for inflation. The service survey pointed to the sharpest increase in input prices in just under seven years, with companies mostly absorbing the added cost burdens themselves instead of fully passing these on to their customers. This may translate into quicker increases in selling prices in months to come, which may curb sales. Firms could also choose to restrict hiring in order to protect profit margins," said Pollyanna de Lima, Principal Economist at IHS Markit.
Numbers to Watch:
The yield on 10-year benchmark federal paper rose to 6.506% at 16:55 IST compared with 6.504% at close in the previous trading session.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 71.245, compared with its close of 71.25 during the previous trading session.
In the commodities market, Brent crude for April 2020 settlement rose $1.79 to $55.75 a barrel. The contract fell 49 cents or 0.89% to settle at $53.96 a barrel in the previous trading session.
OPEC and its allies could reportedly cut production by more than a million barrels a day. The producer group is said to likely bring forward a planned policy meeting from March to February, which would underscore the serious worries over a collapse in the price of oil this year.
Foreign Markets:
European stocks bounced back after starting lower while Asian shares ended higher on Wednesday. Investors continued to weigh the impact of China's effort to stimulate its economy and mitigate the coronavirus outbreak concerns.
China's central bank lowered interest rates on reverse repurchase agreements - a tool used by central banks to add money to the money supply - on Monday to ensure adequate liquidity supply in the system as the country tackles to contain the virus outbreak. The People's Bank of China reduced the 7-day reverse repo rate by 10 basis points from 2.50% to 2.40%, and the 14-day rate was slashed from 2.65% to 2.55%.
PBOC injected 1.7 trillion yuan (approx. $242 billion) into money markets through reverse repurchase operations on Monday and Tuesday. On Wednesday, the central bank said it decided not to conduct open market operations for the day because there was adequate liquidity in the current banking system, which is sufficient to meet the market demand.
As per reports, the fast-spreading infection is already starting to have an impact on China: travel numbers have declined due to restrictions and quarantines, businesses are feeling the impact from falling demand, and large swathes of the country remain shut, including many factories.
The coronavirus has infected more than 20,000 people in China and claimed 465 lives, according to China's National Health Commission.
South Korea's Hyundai Motor reportedly said on Tuesday it decided to temporarily suspend production assembly lines from operating at all of its plants in the country due to disruptions in the supply of parts from China.
The US equity market finished higher for second straight session on Tuesday, 04 February 2020, as investors risk sentiments lifted by the People's Bank of China and actions by Beijing to combat the economic impact of a deadly coronavirus. Adding to the optimism was data that showed new orders for U.S.-made goods rose better than expected rose 1.8% in December.
Buzzing Indian Index:
The Nifty Metal index added 3.12% to 2,671.50, on the back of positive global sentiment. The index has risen 7.70% in three sessions.
Tata Steel (up 5.14%), SAIL (up 4.84%), JSW Steel (up 4.28%), NMDC (up 4.27%), Hindalco Industries (up 3.62%), JSPL (up 3.54%), Vedanta (up 3.25%), Hindustan Copper (up 2.61%) and NALCO (up 2.59%) jumped.
Stocks in Spotlight:
Telecom major Bharti Airtel rose 2.77% to Rs 531.60. The telecom major reported a consolidated net loss of Rs 1035.20 crore against a net profit of Rs 86.20 crore on 2.05% rise in total income to Rs 22,173.90 crore in Q3 December 2019 over Q3 December 2018. The company added around 21 Mn 4G customers to its mobile network. Overall customer base stood at 419 million across 16 countries.
Drug major Sun Pharmaceutical Industries rose 0.13%. The company's wholly owned subsidiaries has launched ABSORICA LD (isotretinoin) capsules in US for the management of severe recalcitrant nodular acne in patients 12 years of age and older.
Granules India surged 5.38%. The US Food & Drug Administration (USFDA) has approved the abbreviated new drug application (ANDA) filed by Granules Pharmaceuticals, a wholly-owned foreign subsidiary of Granules India, for Valganciclovir Hydrochloride for oral solution, 50 mg/mL. The drug is an antiviral medication used to treat cytomegalovirus infections.
BPCL surged 4.79% after the media reported that Russia's Rosneft is keen to bid for acquisition of BPCL.
Bharat Forge rose 1.27%, extending gains for third consecutive session. North American Class 8 preliminary orders for January hit 17,700 units, a 10% increase from a year earlier when they were 16,105 units.
Force Motors advanced 1.08% after its total production rose 10.13% to 2,620 units in January 2020 from 2,379 units in December 2019. The production is up by 52.15% year-on-year (YoY) compared with 1,722 units in January 2019.
Shares of REC jumped 6.12% after consolidated net profit jumped 29.8% to Rs 1666.81 crore in Q3 December 2019 from Rs 1284 crore in Q3 December 2018. Profit before tax (PBT) stood at Rs 2386.47 crore in Q3 December 2019, up by 29.5% from Rs 1842.84 crore in Q3 December 2018. Total income increased by 39.2% to Rs 7719.77 crore in Q3 December 2019 from Rs 5545.78 crore in Q3 December 2018.
SRF surged 6.49% after the company said its board approved the project proposal for setting up a range of dedicated plants to produce specialty chemicals at an estimated cost of Rs 238 crore. The project proposes a capacity addition of 2150 MTPA (million tonnes per annum) within a period of 10 months, i.e., by the end of November 2020. The project is being financed by a mix of debt and internal accruals, SRF announced after market hours on Tuesday.
TVS Motor Company gained 1.87%. The two wheeler manufacturer's consolidated net profit declined 26.1% to Rs 150.61 crore in Q3 December 2019 from Rs 203.91 crore in Q3 December 2018. Profit before tax (PBT) stood at Rs 201.28 crore in Q3 December 2019, down by 30.4% from Rs 289.40 crore in Q3 December 2018. Net sales recorded a 7% fall in the December quarter to Rs 4765.99 crore as compared to Rs 5122.61 crore reported in the same period last year.
Avanti Feeds tumbled 10.38% after the shrimp feed manufacturer reported a dismal Q3 2019 result. On a consolidated basis, net profit slumped 35% to Rs 47.85 crore in Q3 December 2019 as against Rs 73.57 crore reported in Q3 December 2018. Net sales rose 10.5% to Rs 922.69 crore on YoY basis.
CSB Bank rose 1.98%. The bank net profit jumped 38.02 times to Rs 28.14 crore on 8.26% rise in total income to Rs 439.29 crore in Q3 December 2019 over Q3 December 2018. Net NPA decreased to Rs 213.7 crore as on 31 December 2019 from Rs 365.5 crore as on 31 December 2018 and Rs 221.5 crore as on 30 September 2019.
Tata Global Beverages added 3.91%. The company reported 21.42% rise in consolidated net profit to Rs 120.59 crore on 2.72% rise in total income to Rs 1,987.85 crore in Q3 December 2019 over Q3 December 2018. The merger of the Consumer Products Business of Tata Chemicals (TCL) with Tata Global Beverages is on schedule and is expected to be completed during the fourth quarter of current financial year.
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