Domestic shares rose for a third straight trading session on Tuesday. Easing global trade war worries and expectations of more stimulus measures by the government boosted sentiment. A huge dividend from the Reserve Bank of India (RBI) to the government also supported buying.
The barometer index, the S&P BSE Sensex, rose 147.15 points or 0.39% to 37,641.27. The Nifty 50 index rose 47.50 points or 0.43% to 11,105.35.
The Nifty opened above 11,100-mark and posted an intraday high in mid-morning trade. However, it faced strong resistance at 11,150 mark.
The Nifty is up 364 points or 3.39% in three trading sessions from its recent closing low of 10,741.35 on 22 August 2019.
Buying was wide spread today. The S&P BSE Small-Cap index rose 1.63%. The S&P BSE Mid-Cap index rose 0.53%.
The market breadth was strong. On the BSE, 1669 shares rose and 864 shares fell. A total of 156 shares were unchanged.
The central board of RBI said it will transfer Rs 1,76,051 crore to the government, comprising of Rs 1,23,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions. The RBI, in consultation with the Government of India, had constituted a Bimal Jalan committee to review the extant economic capital framework of RBI. The announcement was made in the evening yesterday, 26 August 2019.
The transfer of dividend and surplus capital will alleviate the risks arising out of a tax revenue shortfall. It will also allow the government to immediately infuse capital in state-run banks.
Market sentiment took a U-turn after finance minister Nirmala Sitharaman on Friday, 23 August 2019, announced measures to revive the economy. Sitharaman said the government has withdrawn the surcharge on foreign portfolio investors (FPIs), which was unveiled in the budget for the fiscal year ending March 2020. FM also announced multiple initiatives to help boost the beleaguered automobile sector, besides upfront release of Rs 70,000 crore to public sector banks (PSBs).
The yield on 10-year benchmark federal paper rose to 6.504% compared with 6.472% at close in the previous trading session.
Auto major Tata Motors jumped 8.87% to Rs 120.30. China said it will ease restrictions on car purchases to support auto sales as part of its policy package announced Tuesday to boost the country's consumption.
Regions with limits on vehicle purchases should roll out measures to relax or lift the restrictions and support the purchase of new energy vehicles, according to a guideline issued by the country's State Council. The guideline aims to tap China's consumption potential and better meet the demand of Chinese consumers, the State Council said in a statement.
Revenue at luxury brand Jaguar Land Rover, which brings in most of Tata Motor's revenue, have been impacted due to a slump in China sales.
Commercial vehicles maker Ashok Leyland jumped 5.38% to Rs 66.65. Escorts rose 4.40% to Rs 495.90.
Shares of metal companies rose across the board on value buying after a recent steep fall. The S&P BSE Metal index advanced 2.04% at 8,562.48 today. The index underperformed the market in past one year, slumping 36.08% as against Sensex's 2.72% decline in the same period.
The recent fall in metal shares was triggered by escalating China-US trade war, which could trigger a worldwide economic slowdown and undermine usage of metals. China is the world's top consumer of industrial metals.
Sector bellwether Tata Steel jumped 3.86% to Rs 350.95.
Most IT stocks declined as Indian currency climbed against the dollar in foreign exchange market. The partially convertible rupee was hovering at 71.63, compared with its close of 72.0250 during the previous trading session.
The BSE IT index declined 1.52% to 15,810.50. IT major Infosys (down 2.23%), Tech Mahindra (down 2.12%) and TCS (down 1.67%) declined.
A strong rupee affects the revenues of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
InterGlobe Aviation (Indigo) fell 1.85% to Rs 1649. Indigo hopes to grow at 30% a year over the next few years, chief executive of the airline Ronojoy Dutta said at the company's sixteenth annual general meeting on Tuesday.
Britannia Industries rose 6.17% to Rs 2687.80, extending recent gains on strong buying support. The stock has risen 12.76% in four trading sessions to its current market price of Rs 2,684, from a recent closing low of Rs 2,383.70 on 21 August 2019.
UPL rose 1.50% to Rs 557.70 after a foreign brokerage reportedly initiated coverage on the stock with an 'overweight' rating and a target price at Rs 700.
Reliance Nippon Life Asset Management (RNAM) rose 2.35% to Rs 257. Nippon Life Insurance Company hiked its stake in RNAM by 10.59% to 53.46%. RNAM has now become a subsidiary of Nippon, which intends to continue running the company and its operations without any change in its structure and management. The announcement was made after market hours yesterday, 26 August 2019.
Overseas, most European stocks were trading higher. The French President, Emmanuel Macron, on Monday, 26 August 2019, said that the United States and France has reached an agreement on the so called 3% "digital tax" levied on tech companies like Facebook, Amazon and Google. Earlier, US President Donald Trump threatened to hit the French economy by imposing a retaliatory tax on its French wine.
Asian markets closed mostly higher on signs of Sino-US trade hostilities easing. This helped to restore investor confidence after the previous session's rout.
US stocks rose on Monday, following a sharp sell-off in the prior session, after US President Donald Trump predicted a trade deal with China, cooling investor concerns after a ramp-up in rhetoric derailed markets last week.
Trump, under pressure to scale back a US-China trade war partly blamed for a global economic slowdown, claimed on August 26 that the two sides will begin serious negotiations soon.
In the commodities market, Brent crude for October 2019 settlement was up 64 cents at $58.76 a barrel. The contract fell 64 cents or 1.08% to settle at $58.70 a barrel during the previous trading session.
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