The market posted robust gains in a highly volatile session. Buying was broad based with financials, realty and media stocks making the biggest moves. The Nifty opened with a positive gap above 11,000 mark, but soon pared gains in morning trade to hit an intraday low of 10,756.55. Buying emerged at the day's low, and the index bounced back above 11,000 mark in afternoon trade.
The barometer index, the S&P BSE Sensex, rose 792.26 points or 2.16% to 37,494.12, as per the provisional closing data. The Nifty 50 index rose 228.5 points or 2.11% to 11,057.85 as per the provisional closing data.
The rally was broad based. The S&P BSE Mid-Cap index was up 1.57%. The S&P BSE Small-Cap index was up 1.65%.
The market breadth was strong. On the BSE, 1695 shares rose and 806 shares fell. A total of 138 shares were unchanged.
The buying was triggered by finance minister Nirmala Sitharaman announcing measures to revive the economy. Sitharaman after market hours on Friday, 23 August 2019, said the government has withdrawn the surcharge on foreign portfolio investors (FPIs), which she had unveiled in her budget for the fiscal year ending March 2020.
Investors were also hopeful of resumption of trade talks between US and China. China on Monday said that it opposes a trade escalation with the US and is ready to engage in a dialogue. President Donald Trump said on Monday that China is ready to come back to the negotiating table and the two countries will start talking very seriously.
Among pivotals, TCS (up 1.35%) and HDFC Bank (up 4.29%) supported the up-move. Yes Bank (up 5.4%), HDFC (up 5.2%), Bajaj Finace (up 4.81%) and UltraTech Cement (up 4.76%) also advanced.
JSW Steel (down 2.95%), Tata Steel (down 2%), Sun Pharmaceuticals (down 1.95%) and Vedanta (down 1.82%) declined.
Shares of public sector banks soared after the Finance Minister announced a slew of measures for the banking sector. The S&P BSE Bankex rose 3.57% at 31,530.02 as per the provisional closing data.
For the banking sector, FM announced upfront release of Rs 70,000 crore, additional lending and liquidity to the tune of about Rs 5 lakh crore by providing upfront capital to public sector banks. To boost infrastructure sector, FM announced Rs 100 lakh crores for developing modern infrastructure over 5 years. The Minister added that the banks will pass on rate cuts through MCLR (Marginal Cost of Funds based Lending Rate) reduction to benefit all borrowers. EMIs for housing loans, vehicle and other retail loans will reduce by directly linking repo rate to interest rates. Working capital loans for industry will also become cheaper. To reduce harassment and bring in greater efficiency, public sector banks will ensure mandated return of loan documents within 15 days of loan closure. This will benefit borrowers who have mortgaged assets
To support to non-banking financial companies (NBFCs) and housing finance companies (HFCs), FM announced more credit support for purchase of houses, vehicles, consumption goods. As part of the measures, the government announced additional liquidity support to HFCs Rs 20,000 crore by National Housing Bank (NHB) thereby increasing it to Rs 30,000 crore. FM also announced partial credit guarantee scheme for purchase of pooled assets of NBFCs/HFCs upto Rs 1 lakh crore - to be monitored at highest level in each bank. NBFCs are now permitted to use the Aadhaar authenticated bank know your customer (KYC) to avoid repeated processes. Necessary changes will be made in Prevention of Money Laundering Act (PMLA) rules and Aadhaar regulations.
Auto shares were mixed as the government did not provide GST relief to the auto industry. The S&P BSE Auto marginally gained 0.42% at 15,794.17.
Sitharaman on Friday, 23 August 2019, announced multiple initiatives to help boost the beleaguered automobile sector. The announcement came at a time when auto sales are reeling due to the massive downturn. However, there was no announcement on the Goods & Services Tax (GST) front. The auto sector was hopeful of a reduction in the GST rate from 28% to 18%, which could have revived the demand ahead of festive season. The finance minister indicated that she would meet the press twice over the coming weeks to address more issues. This has spurred hopes for additional measures for the auto sector, especially on scrappage policy and GST rate cut.
Barring metals, all the sectoral indices were trading higher. The S&P BSE Metal dropped 1.12% at 8391.21.
Investors are concerned that the Sino-US trade war could trigger a worldwide economic slowdown, which could undermine metals usage. China is the world's top consumer of industrial metals. US President Donald Trump, on Friday, announced he will raise tariffs from 25% to 30% on $250 billion in goods that are already being taxed starting 1 October. He also threatened to ratchet up promised tariffs on the remaining $300 billion in Chinese imports from 10% to 15%
Meanwhile, Moody's Investors Service on Friday cut India's GDP growth forecast for 2019 calendar year to 6.2% from the previous estimation of 6.8%. For 2020 calendar year, it reduced the estimate by a similar measure to 6.7%. Moody's said that the weaker global economy has stunted Asian exports and the uncertain operating environment has weighed on investment.
Alkem Laboratories rose 1.22%. Alkem Laboratories informed that USFDA had conducted inspections at the company's manufacturing facilities located at St. Louis, Fenton Park, USA from 16 August 2019 to 22 August, 2019 and Baddi, India from 19 August 2019 to 23 August 2019. At the end of the inspection, the company has received a Form 483 with four observations for the facility located at St. Louis, Fenton Park, USA and no Form 483 is received for the facility located at Baddi, India. The announcement was made after market hours on Friday, 23 August 2019.
IPCA Laboratories rose 1.45%. IPCA Laboratories informed that the USFDA conducted the inspection of the company's formulations manufacturing unit situated at Piparia (Silvassa) from 19 August 2019 to 23 August 2019. At the conclusion of the inspection, the USFDA issued a Form 483 with three observations. The announcement was made after market hours on Friday, 23 August 2019.
Interglobe Aviation was up 2.39% after the media reports suggested that Rakesh Gangwal, co founder of Indigo, has flagged a truce with Airline Company. Rakesh Gangwal will be supporting company's proposals at shareholders meeting. Gangwal will also support company's move to expand to the board to 10 directors at an upcoming Annual General Meeting (AGM). The company also announced the appointment Meleveetil Damodaran as an Independent Director of the Company with effect from 23 January 2019.
Larsen & Toubro gained 3.84% after the company said it received a 'significant' order from NTPC. The company announced that it has bagged an engineering, procurement and construction (EPC) for setting up Flue Gas Desulphurisation (FGD) system at Vindhyachal Super Thermal Power Station for Stage 1 (6x210 MW) and Stage 2 (2x500 MW) in Madhya Pradesh.
Bharat Heavy Electricals (BHEL) was up by 4.04%. BHEL has secured two orders for emission control equipment for thermal power plants worth Rs 2,500 crore. The orders have been placed on BHEL by NTPC. The project involves the supply and installation of flue gas desulphurization (FGD) systems for 13 coal based units at 2,600 MW Korba (STPS Stage I, II & III) in Chhattisgarh and 2,100 MW Ramagundam (STPS Stage I & II) in Telangana.
The private multi-port operator, Adani Ports and Special Economic Zone announced that the proposed buyback offer of shares will open on 6 September and close on 20 September 2019. In June, the company announced its plan to buyback up to 3.92 crore fully paid up equity shares, or 1.89% stake, at Rs 500 each payable in cash for an amount aggregating up to Rs 1960 crore on a proportionate basis, through the tender offer route. The stock was trading 5.51% higher at Rs 368.65
On the global front, European stock market opened lower as investors reacted to the latest escalation in the US-China trade war. UK market is closed due to a bank holiday. Traders keenly waited for the outcome of G-7 summit held in France.
The US government received a major blow from the French as it plans to implement a 3% so-called "digital tax" on tech giants like Facebook, Amazon and Google. In an act of retaliation, the U.S officials have threatened to impose tariffs on French wine.
US stocks ended sharply lower Friday. Federal Reserve Chairman Jerome Powell left the door open for another interest rate cut in September in a widely anticipated speech in Jackson Hole, Wyoming.
Asian shares fell across the board. China on Monday reportedly said that it opposes a trade escalation with the US and is ready to engage in a dialogue. Following the additional tariff, China's yuan hit an 11-year low and tumbled to a record low in offshore trade after a sharp re-escalation in the US-China trade war.
"China strongly opposes trade protectionism and blockade in the field of new technologies. China is making efforts to ensure the integrity of production chains, we are ready to resolve the existing problem through consultation and cooperation, we strongly oppose the escalation of the trade war," the media quoted Chinese Vice Premier Liu He as saying.
Earlier, US President Donald Trump announced that he will raise tariffs from 25% to 30% on $250 billion in goods that are already being taxed starting 1 October. He also threatened to ratchet up promised tariffs on the remaining $300 billion in Chinese imports from 10% to 15%.
Trump's announcement came after Beijing unveiled a new round of retaliatory tariffs on about $75 billion worth of US goods. China will place additional tariffs of 5% or 10% on US imports starting on 1 September, according to a statement posted by China's Finance Ministry.
Earlier Friday, Trump ordered US companies doing business in China to find an "alternative" and had promised to deliver further action after he met with his economic team at the White House.
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