Key equity barometers posted robust gains in a highly volatile session. Buying was broad based with financial 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. Strong buying emerged at the day's low, which catapulted the index above 11,000 mark in afternoon trade.
The 30-share Sensex rose 792.96 points or 2.16% to 37,494.12. The Nifty 50 index jumped 228.50 points or 2.11% to 11,057.85.
The breadth was tilted towards gainers. On the BSE, 1698 shares rose and 805 shares fell. A total of 136 shares were unchanged. The S&P BSE Mid-Cap index rose 1.57%. The S&P BSE Small-Cap index rose 1.65%.
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 Sitharaman after market hours on Friday, 23 August 2019, said the government has withdrawn the surcharge on foreign portfolio investors (FPIs), which she had unveiled in her budget for the fiscal year ending March 2020.
Meanwhile, a foreign brokerage upgraded India to 'overweight' on positive local developments amid rising global uncertainty. Reform measures and sectoral incentives could provide a much-needed booster shot, it said, adding that recovery is expected is the second half of the calendar year 2019 (H2CY19).
Investors were also hopeful of resumption of trade talks between US and China.
Overseas, European shares pared early losses after US President Donald Trump said China had called US trade negotiators to resume talks. UK markets are closed due to a bank holiday.
In terms of data, Munich's Ifo Institute said that German business morale fell in August, with its business climate index coming in at 94.3, versus an expected 95.1. There are fears Germany could be headed for a recession after gross domestic product (GDP) shrank by 0.1% in the second quarter.
Asian shares fell across the board with China's yuan hitting an 11-year low 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.
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%.
Trump's announcement came after Beijing unveiled a new round of retaliatory tariffs on about $75 billion worth of US goods. China said it 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.
US stocks ended sharply lower Friday, following trade war concerns. Meanwhile, 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.
Back home, metal shares were under pressure as escalating China-US trade war shook confidence in the world economy. JSW Steel (down 2.92%), Tata Steel (down 2%), Vedanta (down 1.82%), Jindal Steel & Power (down 0.74%), NMDC (down 0.69%) and Hindalco Industries (down 0.67%) declined.
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.
Even as broader market surged, shares of auto majors like Hero Motocorp, Tata Motors, Maruti Suzuki India and Bajaj Auto fell by between 0.34% to 1.92% as the government did not provide GST relief to the auto industry.
Finance Minister Nirmala Sitharaman on Friday, 23 August 2019, announced multiple initiatives to help boost the beleaguered automobile sector. 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 GST rate cut.
Private sector banks rallied. Yes Bank and RBL Bank rallied over 6% each, while sector bellwethers HDFC Bank, ICICI Bank and Axis Bank jumped by 3.10% to 4.29%.
Public sector banks (PSBs) surged after FM announced upfront release of Rs 70,000 crore to PSBs. IDBI Bank rallied over 13%, while Indian Bank and Central Bank of India jumped over 10% each. State Bank of India climbed 3.38% to Rs 280.25.
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.
Edelweiss Financial Services jumped 10.40% to Rs 109.85 due to bargain hunting after a recent slide. The stock tumbled 30.90% in the past six trading sessions to settle at Rs 99.50 on Friday, 23 August 2019, from its close of Rs 144 on 14 August 2019.
On Friday, media reports indicated that the Enforcement Directorate (ED) is examining an investment of Rs 450 crore made by Edelweiss Asset Reconstruction Company (ARC) in Kohinoor CTNL Infrastructure. This is part of the ED probe into alleged irregularities in awarding loans and investment made in the real estate firm by beleaguered Infrastructure Leasing & Financial Services (IL&FS), reports added.
Following this report, Edelweiss Financial Services issued a clarification to the bourses that public sector banks had extended loans to Kohinoor Square project in 2010 which subsequently turned non-performing asset (NPA). From 2015 onwards, Edelweiss ARC participated in public auctions and bought the loans. Edelweiss ARC exposure is about 120 crore invested under the 15:85 structure. The current probe by IL&FS on Kohinoor transactions are for the period of 2005-12 and related to transactions entered into by IL&FS and certain parties. Edelweiss group had no exposure to Kohinoor during that period, the company added.
Capacite Infraprojects soared 8.08% to Rs 191.30. The construction firm announced during market hours today, 26 August 2019, that the Income Tax Department has conducted a search at the premises of the company and the same was concluded on 25 August 2019. No irregularities have been found during the search operation by the Authorities against the company. It further added that there have been no claims made against the company nor have there been any disclosures. The above proceedings have no impact on the financial and operational performance of the company. The company is providing all possible assistance to the Authorities in this matter, the firm said in an exchange filing.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 71.995, compared with its close of 71.66 during the previous trading session.
In the commodities market, Brent crude for October 2019 settlement was up 27 cents at $59.61 a barrel. The contract fell 58 cents or 0.96% to settle at $59.34 a barrel in the previous trading session.
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