The stock indices continued to trade firm in mid-afternoon trade as assembly elections results in Gujarat and Himachal Pradesh showed that BJP will return to power for a sixth straight term in Gujarat and will overthrow Congress rule to form government in Himachal Pradesh. At 14:20 IST, the barometer index, the S&P BSE Sensex, rose 234.87 points or 0.7% at 33,697.84. The Nifty 50 index gained 77.50 points or 0.75% at 10,410.75. Positive cues from global markets also lifted investor spirits.
The BJP has been ruling in Prime Minister Narendra Modi's home state Gujarat for the last two decades plus and a win today will boost its chances to form government at the centre once again in the 2019 general elections. The win will also help BJP to continue with its bold reforms and fulfill mandate for economic development.
Key indices had slumped in early trade after early trends of Gujarat assembly election results showed a close fight between incumbent BJP and rival Congress party. Market soon reversed losses in morning trade as concerns eased following BJP crossing past simple majority mark in its stronghold Gujarat. Market extended gains in mid-morning trade as BJP win was confirmed in both the states. Stocks held firm later during the day.
Among the secondary indices, the S&P BSE Mid-Cap index rose 0.94%, outperforming the Sensex. The S&P BSE Small-Cap index gained 0.63%, underperforming the Sensex.
The breadth, indicating the overall health of the market, was strong. On the BSE, 1,556 shares rose and 1,030 shares fell. A total of 144 shares were unchanged.
PSU OMCs dropped. BPCL (down 0.39%), HPCL (down 1.22%) and Indian Oil Corporation (down 1.31%) declined. While, oil & gas explorations firms gained. GAIL (India) (up 2.21%), ONGC (up 0.08%) and Reliance Industries (up 0.55%) gained. Oil India fell 0.49%.
Shares of Adani group companies rose as Bharatiya Janata Party will form the next government in Gujarat. Adani Ports and Special Economic Zone (up 2.24%), Adani Power (up 2.55%), Adani Enterprises (up 4.52%) and Adani Transmission (up 1.35%) gained. The Adani Group is headed by Gautam Adani who is understood to be close to Prime Minister Narendra Modi.
Aurobindo Pharma gained 1.32% after the company in its clarification has denied the contents of reports stating that the company and Dr Reddy's Laboratories are frontrunners to buyout bankrupt Orchid Pharma. The clarification was issued during market hours today, 18 December 2017.
Dr Reddy's Laboratories gained 1.33%. The company has clarified with regards to reports of Aurobindo Pharma and Dr Reddy's Laboratories are frontrunners to buyout bankrupt Orchid Pharma, that the report relating to merger & acquisition activity of the company is purely speculative and the company has not made any official statements related to the matter. The clarification was issued during market hours today, 18 December 2017.
On the political front, counting of votes is underway for recently held assembly elections in Gujarat and Himachal Pradesh with trends showing that BJP will form government in both the states after early trends had showed a close fight with the rival Congress party. BJP was leading or won in 101 seats while Congress was leading or won in 76 seats out of total 182 seats in Gujarat. BJP was leading or won in 45 seats while Congress was leading or won in 21 seats out of total 68 seats in Himachal Pradesh.
Polling in Himachal Pradesh took place in single phase on 9 November 2017, while in Gujarat, polling took place in two phases on 9th and 14th December 2017.
On the macroeconomic data front, India's merchandise exports surged 30.5% to $26.2 billion in November 2017 over a year ago. Meanwhile, merchandise imports increased 19.6% to $40.02 billion. The trade deficit rose 3.2% to $13.83 billion in November 2017 from $13.01 billion in November 2016.
India's services exports improved 7.9% to $14.15 billion in October 2017 over October 2016. Meanwhile, India's services imports galloped 13.3% to $8.70 billion in October 2017. India's services trade surplus rose 0.3% to $5.45 billion in October 2017 from $5.43 billion in October 2016.
Overseas, European stocks gained and Asian stocks were mostly higher after a positive lead from Wall Street. Japan's export growth accelerated in November to mark a full year of annual gains. The 16.2% export growth in November, showed acceleration from a 14% year-on-year increase in the previous month, according to the Ministry of Finance.
China's central bank raised interest rates on reverse repurchase agreements, or reverse repos, used for open market operations by 5 basis points for the 14-day tenor, following upward adjustments on other tenors last week.
US stocks rose to all-time highs on Friday, 15 December 2017, as expectations of a Republican tax bill passing increased. The plan will likely cut the corporate tax rate to 21% from 35%.
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