Domestic benchmark indices ended with modest gains on Friday, rising for the seventh consecutive session. The sentiment got a boost after the Reserve bank of India left its key policy rates unchanged while retaining its accommodative stance. It also announced a slew of measures to ensure adequate liquidity in the banking system.
The S&P BSE Sensex, added 326.82 points or 0.81% at 40,509.49. The Nifty 50 index jumped 79.60 points or 0.67% at 11,914.20.
The Nifty has risen 6.16% in seven sessions. It has surged 1108.65 points, or 10.26% from its recent closing low of 10,805.55 on 24 September 2020.
The broader market ended with losses. The S&P BSE Mid-Cap index was fell 0.42% while the S&P BSE Small-Cap lost 0.29%.
The market breadth was negative. On the BSE, 1230 shares rose and 1454 shares fell. A total of 170 shares were unchanged.
COVID-19 Update:
India reported 8,93,592 active cases of COVID-19 infection and 106,490 deaths while 59,06,069 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India. Total COVID-19 confirmed cases worldwide stood at 36,444,284 with 1,060,929 deaths.
RBI Policy Outcome:
RBI's Monetary Policy Committee (MPC) decided to hold key policy rates at existing levels. Three new external members in the panel voted in today's decision. The repo rate, the interest rate at which it lends short-term funds to commercial lenders, was retained at 4%. Consequently, the reverse repo rate, at which the RBI borrows from lenders, remained unchanged at 3.35%. The central bank retained its "accommodative" stance on monetary policy to support the coronavirus-hit economy.
Turning to the growth outlook, the recovery in the rural economy is expected to strengthen further, while the turnaround in urban demand is likely to be lagged in view of social distancing norms and the elevated number of COVID-19 infections.
Governor Shaktikanta Das said that India's GDP growth will contract by 9.5% in fiscal 2021 due to disruptions caused by the Covid-19 pandemic that has hit economic activities. However, the GDP growth rate may break out of contraction and turn positive during January-March due to recovery seen across sectors, he added.
RBI announced a slew of liquidity measures, including the purchase of state development bonds through open market operations, to ensure liquidity in the banking system. It will conduct on tap targeted long-term repo operations (TLTRO) with tenors of up to three years for a total amount of up to Rs one lakh crore at a floating rate linked to the policy repo rate.
The central bank also increased the quantum of liquidity infusion into the market through purchase of government securities to Rs 20,000 crore. It also increased the held-to-maturity limit of banks to 22% from 19.5% of net demand and time liabilities (NDTL). This, along with the inclusion of SLD in OMO, is expected to ease concerns about illiquidity and also support the state government borrowing programme.
In addition, the central bank will rationalise risk weights for all new housing loans by 31 March 2022. The RBI will also extend the scheme for co-lending to all non-banking finance companies and housing finance companies. The RBI also decided to provide round-the-clock availability of Real Time Gross Settlement (RTGS) from December.
Numbers to Track:
In the foreign exchange market, the partially convertible rupee rose to 73.16 compared with its previous closing 73.24.
The yield on 10-year benchmark federal paper fell to 5.941% compared with previous closing of 6.015% in the previous trading session.
MCX Gold futures for 04 December 2020 settlement gained 0.97% to Rs 50,663.
In the commodities market, Brent crude for December 2020 settlement fell 45 cents to $42.89 a barrel. The contract rose 3.22% to settle at $43.34 in the previous trading session.
Global Markets:
The US Dow Jones index futures were up 130 points, indicating a strong opening in the US market today.
Most shares in Europe and Asia advanced on Friday. Stocks in mainland China climbed as they returned to trade on Friday from holidays. Markets in South Korea and Taiwan are closed on Friday for holidays.
A private survey showed services sector activity in China expanding in September. The Caixin/Markit services Purchasing Managers' Index for September came in at 54.8.
In US, stocks ended higher on Thursday as comments by U.S. President Donald Trump fueled hopes of fresh fiscal support, while data underscored the view that the labor market recovery was struggling to gain momentum.
Investor focused on ongoing developments regarding potential new fiscal stimulus stateside. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke on Thursday about a broad coronavirus stimulus plan, after U.S. President Donald Trump pulled out of talks earlier in the week and called for stand-alone bills.
Initial claims for state unemployment benefits totaled a seasonally adjusted 840,000 for the week ended 3 October 2020, compared with an upwardly revised 849,000 in the prior week, the Labor Department said on Thursday.
Buzzing Indian Segments:
The Nifty Bank index jumped 2.83% to 23,846.80. The index has risen 11.37% in seven sessions.
Punjab National Bank (up 3.96%), Bank of Baroda (up 3.87%), Axis Bank (up 3.64%), ICICI Bank (up 3.64%), RBL Bank (up 3.63%), State Bank of India (up 3.52%), HDFC Bank (up 3.51%), Bandhan Bank (up 2.21%), Federal Bank (up 1.44%), IDFC First Bank (up 1.27%) and IndusInd Bank (up 0.9%) advanced.
Lakshmi Vilas Bank surged 8.43% after the bank said it has received an indicative non-binding offer from Clix Group. "Further to the process of considering and evaluating the proposed amalgamation with M/s. Clix Capital Services Private Limited ("Clix Capital"), M/s. Clix Finance India Private Limited ("Clix Finance") and M/s. Clix Housing Finance Private Limited ("Clix Housing") (collectively, the "Clix Group"), we are glad to inform that, the Bank has received an indicative non-binding offer from Clix Group. The Bank will continue to share information on material developments as and when they materialize," the lender said in a communiquto the BSE.
Shares of housing finance companies (HFCs) rallied after RBI decided to extend the scheme of co-lending to all non-banking financial companies. The arrangement entailed joint contribution of credit at the facility level, by both the lenders as also sharing of risks and rewards between them for ensuring appropriate alignment of respective business objectives. The revised guidelines will be issued by end of October 2020.
Repco Home Finance (up 7.23%), LIC Housing Finance (up 6.91%), PNB Housing Finance (up 5.93%), Can Fin Homes (up 5.33%), GIC Housing Finance (up 5.03%), Indiabulls Housing Finance (up 4.46%) and HDFC (up 0.46%) climbed.
Stocks in Spotlight:
5paisa Capital advanced 1.44% after the company reported a consolidated net profit of Rs 2.84 crore in Q2 September 2020 as against a net loss of Rs 3.51 crore in Q2 September 2019. Total income during the quarter surged 126.13% to Rs 52.62 crore in from Rs 23.27 crore reported in the same period last year. The company recorded the highest ever client acquisition with over 2,45,000 acquisitions in the quarter, crossing 9,50,000 customers in total.
CreditAccess Grameen rose 0.83% after the company said it raised about Rs 799.99 crore through qualified institutional placement (QIP) of 1.13 crore equity shares at Rs 707 each. The QIP issue opened on 5 October 2020 and closed on 8 October 2020.
JSW Steel fell 0.58%. The steel major's crude steel production rose 30% to 3.85 million tonnes (MnT) in Q2 FY21 as against 2.96 MnT in Q1 FY21. The company said it achieved average capacity utilisation of 86% in Q2 FY21 in line with pre Covid-19 level of 85% in Q2 FY20. This is higher from capacity utilisation of 66% for Q1 FY21, which was impacted by the pandemic.
Tata Steel declined 1.02%. The steel major said it achieved the highest ever quarterly deliveries of 5.05 million tons in India. In this environment, Tata Steel India ramped up its steelmaking and downstream operations back to pre-COVID level, with all major sites operating at around full capacity utilization.
SAIL rose 0.30%. The state-run steel major registered a 31.3% growth in sales during Q2 September 2020 over Q2 September 2019. SAIL added that post the COVID-19 related lockdown, the company has been witnessing an impressive sales performance which started in June 2020.
Container Corporation of India added 0.86%. The company's total throughput volumes declined 8.61% to 8,85,673 twenty-foot equivalent units (TEUs) (provisional) in Q2 FY21 from 9,69,158 TEUs in Q2 FY20. Sequentially, the company's total volume have increased by 22.16% from 7,32,711 TEUs in Q1 FY21.
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