Key benchmark indices ended with strong gains on Monday, supported by positive global cues. Global stock markets were mostly higher on fresh optimism over the China-US trade talks. The barometer index, the BSE Sensex, rose 529.82 points or 1.31% to 40,889.23, as per the provisional closing data. The Nifty 50 index rose 164.60 points or 1.38% to 12,079, as per the provisional closing data.
The Sensex scaled fresh record high of 40,931.71 in late trade as hectic buying was seen in key pivotals ahead of the Morgan Stanley Capital International (MSCI) rejig. Global index compiler MSCI will re-constitute its indices from 26 November 2019. The index is designed to measure the performance of the largecap and midcap segments of the Indian market.
The Nifty was still 24.05 points away from its all time high of 12,103.05 hit on 3 June 2019.
In the broader market, the S&P BSE Mid-Cap index rose 1.17% while the S&P BSE Small-Cap index advanced 0.81%. Both these indices lagged the Sensex.
The market breadth was positive. On the BSE, 1412 shares rose and 1090 shares fell. A total of 205 shares were unchanged. In Nifty 50 index, 44 stocks advanced while 6 stocks declined.
Technical factor
The Nifty's RSI (relative strength index) stood at 67.02. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.
The stock was trading above its 5-day, 50-day and 200-day moving average (DMA) placed at 11,980.20, 11,540.88 and 11,405.86 respectively.
Politics:
The tussle over government formation in Maharashtra reached the Supreme Court (SC). The Shiv Sena-Nationalist Congress Party (NCP)-Congress combine challenged the Bharatiya Janata Party (BJP) for forming a government in Maharashtra. SC reserved its judgment after hearing arguments by lawyers of the central government and the Shiv Sena-Nationalist Congress Party-Congress combine. SC will pass its order at 10.30 IST on Tuesday.
The three parties argued that BJP leader Devendra Fadnavis doesn't have the numbers to be chief minister, taking their fight separately to Parliament. BJP and the central government lawyers said Fadnavis will prove his majority, but the court didn't have the power to direct Maharashtra's governor to fix a deadline for a floor test in the Assembly.
Devendra Fadnavis was sworn in on Saturday (23 November 2019) morning as the chief minister of Maharashtra for the second consecutive term. Ajit Pawar, a member of the NCP, took oath as deputy chief minister of the state. Ajit Pawar is the nephew of NCP president Sharad Pawar.
Buzzing Index:
Shares of steel producers gained on Monday after media reports suggested that US Steel and ArcelorMittal have raised flat-rolled steel prices today, their third increase in less than a month.
Jindal Steel & Power (up 6.51%), Hindalco Industries (up 4.60%), Tata Steel (up 4.99%), JSW Steel (up 3.58%), NMDC (up 3.09%), SAIL (up 2.59%) and Jindal Stainless (up 1.80%) advanced.
Jayant Acharya, director (sales and marketing), JSW Steel, was quoted by the media saying that, globally, steel prices have gone up by $20-$30 a tonne due to a production shut-down by most steel companies, as their selling prices had fallen below production costs.
Last week, the media reported that steel companies in India have hiked prices by Rs 500-750 a tonne for the first time this fiscal. However, domestic prices are still at a discount to international prices, suggesting some room for further upside in steel prices.
Media reports further suggest that Chinese steel production dropped by one million tonnes, a decline of 1.2%, compared to October last year. China produced 81 million tonnes of crude steel in October 2019. This is the first decline in steel production year-on-year (y-o-y) since December 2017, the reports added.
Paul Bartholomew, senior managing editor, S&P Global Platts told the media that 2020 is going to be a stronger year for steel as the demand will be solid due to Chinese production remaining lower and several projects of property constructions in the pipeline. Compared to other metal prices, which are subdued, steel has been doing well for the last couple of weeks, he added.
MSCI Rejig
DLF (up 1.69%), HDFC Asset Management (up 3.14%), Berger Paints India (up 2.63%), SBI Life Insurance Co (up 1%), Siemens India (up 2.09%) and ICICI Prudential Life (up 1.85%) will be included in the MSCI India Domestic Index.
Indraprastha Gas (down 0.93%) and Info Edge (India) (up 0.71%) will be added in the MSCI India Domestic Index. Simultaneously, these two stocks will be excluded from the MSCI India Domestic Small Cap Index.
MSCI will drop Bharat Heavy Electricals (up 0.09%), Glenmark Pharmaceuticals (up 1.72%), Indiabulls Housing Finance (up 9.58%), L&T Finance Holdings (up 7.93%), Vodafone Idea (up 4.27%) and Yes Bank (down 1.70%) from the MSCI India Domestic Index. These stocks will be included in the MSCI India Domestic Small Cap Index.
All MSCI changes will be implemented as of the close of 26 November 2019.
BSE Rejig
The BSE on Friday (22 November 2019) announced the reconstitution of S&P BSE Indices. As per the rejig, Titan Company (up 2.49%), UltraTech Cements (up 0.92%) and Nestle India (up 2.10%) will replace Yes Bank (down 1.70%), Vedanta (down 2.43%), Tata Motors (up 2.19%) and Tata Motors DVR (up 2.22%) in the benchmark Sensex. The changes will be effective Monday, 23 December 2019.
The BSE also announced a rejig in 14 other indices. However, there was no change in the S&P BSE Bankex.
InterGlobe Aviation (up 4.41%), Info Edge (India) (up 0.71%) and SBI Life Insurance (up 1%) will replace Glenmark Pharmaceuticals (up 1.72%), Cadila Healthcare (up 2.13%) and Edelweiss Financial Services (up 4.20%) from S&P BSE 100 index.
Among other changes, the BSE will add Syngene International (down 1.12%), Thermax (down 0.54%) and Gujarat Gas (down 2.34%) in the BSE 200 index and exclude Graphite India (down 0.03%), HEG (up 2.52%) and Indiabulls Ventures (up 2.74%) from the index.
Corporate Updates:
Power Grid Corporation of India (PGCIL) rose 0.25% to Rs 199.05. PGCIL said it was declared as the successful bidder in two intra-state transmission system projects of Uttar Pradesh under tariff-based competitive bidding (TBCB). PGCIL will construct 765/400/220 kilovolt (kV) GIS substations in Meerut and Rampur; and 400/220/132 kV GIS substations in Simbhaoli and Sambhal with associated transmission lines.
Unichem Laboratories surged 11.98% to Rs 171 after the company announced that it has received ANDA approval for its Atenolol Tablets USP, 25 mg, 50 mg, and 100 mg. from the United States Food and Drug Administration (USFDA) to market a generic version of TENORMIN (Atenolol) Tablets, 25 mg, 50 mg, and 100 mg, of Alvogen Malta Operations. Atenolol Tablets is indicated for the treatment of hypertension, to lower blood pressure. The product will be commercialized from Unichem's Ghaziabad Plant.
Indoco Remedies rose 3.25% to Rs 154.30 after the pharma company announced it has received Establishment Inspection Report (EIR) from the US Food and Drug Administration (USFDA) for its sterile facility (Plant II) and solid dosages facility (Plant III) at Verna, Goa. The inspection was carried out from 7 October 2019 to 15 October 2019.
Zee Entertainment Enterprises (ZEEL) in an exchange filing reported that BlackRock Inc. has acquired 0.24% stake in the company and thereby increased its stake in ZEEL from 4.77% to 5.01%. The acquisition was carried out on 21 November 2019. The announcement of acquisition was made before market hours today. Shares of ZEEL fell 4.25% to Rs 342.70.
ARSS Infrastructure Projects hit an upper circuit limit of 5% at Rs 23.75 after the company said it received work order worth Rs 45.80 crore for construction of a road and bridge in Sonepur, Odisha. The announcement was made after market hours on Friday, 22 November 2019.
MEP Infrastructure Developers jumped 5.95% to Rs 41.85. The company reported that the company has received the Letter of Award (LOA) from National Highways Authority of India (NHAI), for the project of 'Collection of user fee at Chhajarsi Fee Plaza Delhi- Merrut Expressway, Uttar Pradesh. The contractual amount for the project is Rs 158.40 crore payable to NHAI on a weekly basis.
ITD Cementation India (ITDC) was locked in an upper circuit of 5% at Rs 66.05 after the company said it has won orders valued over Rs 3400 crore.
Bharti Airtel rose 8% to Rs 454.70 after a foreign brokerage retained its buy rating on the stock while raising its target price to Rs 515 per share from Rs 415 per share. The brokerage reportedly raised its estimates on Bharti Airtel's average revenue per user (ARPU) by 1% and its revenue by 2% for FY21-22.
Foreign Markets:
Overseas, shares in Europe continued to trade higher while most Asian stocks ended higher as investors were hopeful of progress in the US-China trade dispute.
U.S. National Security Advisor Robert O'Brien on Saturday said a so-called phase one deal with China could still be reached by the end of the year. However, he also emphasized that Washington would not turn a blind eye to the Hong Kong protests.
The embattled city saw the opposition pro-democracy movement make significant gains in local elections this weekend, with Hong Kong's democrats securing a symbolic majority as residents turned out in record numbers to vote.
Back in Europe, Britain's two main political parties have now both launched their manifestos in separate bids to win over the public ahead of a crucial December 12 election.
The opposition Labour party kicked things off last Thursday with a manifesto promising a windfall tax on oil companies and re-nationalization of some industries, while the Conservatives launched their own plan for the U.K. that would see 50,000 additional nurses in the National Health Service by the end of Parliament.
US markets closed higher Friday as both Washington and Beijing made positive comments on the potential for a trade deal between the world's two biggest economies.
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