Shares jump on broad based buying

Key equity barometers ended with strong gains on Thursday, with the Nifty closing above 11,950. Some volatility was witnessed on account of weekly index options expiry on the NSE. The sentiment was buoyed by multiple announcements by the Union Cabinet on Wednesday. Global cues were positive after the US Federal Reserve kept interest rates unchanged, as expected, at its policy meeting on Wednesday and signaled rate settings were likely to remain accommodative.

The barometer index, the BSE Sensex, rose 169.14 points or 0.42% to 40,581.71, as per the provisional closing data. The Nifty 50 index rose 61.65 points or 0.52% to 11,971.80, as per the provisional closing data.

 

The buying was broad based. The S&P BSE Mid-Cap index rose 0.69% and the S&P BSE Small-Cap index added 0.59%.

The market breadth was positive. On BSE, 1372 shares advanced while 1049 shares declined. A total of 171 shares were unchanged. In Nifty 50 index, 37 stocks advanced and 13 stocks declined.

Data Releases Today:

India's industrial production (IIP) data for October 2019 will be announced on today. Industrial output in India dropped 4.3% year-on-year in September of 2019, following an upwardly revised 1.4% decline in August.

The Manufacturing production data for October 2019 will also be announced today. Manufacturing Production in the country decreased 3.90% in September of 2019 over the same month in the previous year.

The Consumer Price Index (CPI) figures for November 2019 will also be unveiled today. India's retail price inflation rate climbed to 4.62% year-on-year in October 2019, the highest in over a year, from the previous month's 3.99%. Inflation rose above the Reserve Bank of India's medium-term target of 4% for the first time since July 2018, following recent cuts in interest rates.

Economy:

The Union Cabinet, chaired by the Prime Minister Narendra Modi, gave an approval for setting up Infrastructure Investment Trust and monetize National Highway Projects. The Cabinet gave an approval authorizing National Highways Authority of India (NHAI) to set up Infrastructure Investment Trust(s) (InvIT) as per InvIT Guidelines issued by SEBI. This will enable NHAI to monetize completed National Highways that have a toll collection track record of atleast one year and NHAI reserves the right to levy toll on the identified highway. This move will also attract patient capital (for say 20-30 years) to the Indian highway market, as these investors are averse to construction risk and are interested in investment in assets which provide long-term stable returns.

Further, the Cabinet approved the proposal to make amendments in the Insolvency and Bankruptcy Code, 2016 (code), through the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019. The amendments aim to remove certain difficulties being faced during insolvency resolution process to realise the objects of the code and to further ease doing of business. Amendments to the Code to remove bottlenecks, streamline the CIRP and protection of last mile funding will boost investment in financially distressed sectors. Additional thresholds introduced for Financial Creditors represented by an authorized representative due to large numbers in order to prevent frivolous triggering of Corporate Insolvency Resolution Process (CIRP).

The Cabinet also approved a partial credit guarantee scheme for public sector banks (PSBs) to purchase high-rated pooled assets from financially sound Non-Banking Financial Companies (NBFCs)/Housing Finance Companies (HFCs), with the amount of overall guarantee provided by government till the first loss of up to 10% of fair value of assets being purchased by banks or Rs 10,000 crore, whichever is lower. The scheme would cover NBFCs/HFCs that may have slipped into SMA-0 category during the one year period prior to 1 August 2018, and asset pools rated "BBB+" or higher.

Politics:

The Rajya Sabha on Wednesday approved the Citizenship (Amendment) Bill, completing the legislative procedure for giving Indian citizenship to non-Muslim migrants from Pakistan, Afghanistan and Bangladesh. The Bill was passed with 125 votes in favour and 105 against it. The Bill was passed by Lok Sabha on Monday. It will now go to the President for his assent.

Buzzing Index:

Shares of auto companies rose after automobile dealers' body FADA on Wednesday said retail sales of passenger vehicles in November increased, driven by festive demand during the month.

The Nifty Auto index rose 1.28% to 7,938.95. Tata Motors (up 7.08%), Ashok Leyland (up 2.42%), Eicher Motors (up 1.96%), Hero MotoCorp (up 1.56%), TVS Motor Company (up 1.18%), Mahindra & Mahindra (up 0.85%) and Escorts (up 0.29%) advanced. Bajaj Auto slipped 0.22%.

Vehicle registrations across the country increased by 2% in November year-on-year due to the festive season, the Federation of Automobile Dealers Associations (FADA) said on Wednesday.

Two-wheeler registrations totalled 17.05 lakh last month compared to 16.6 lakh in November last year, marking an increase of 3%. Three-wheeler registrations showed a dramatic jump of 20% with 65,348 registrations in November 2019 compared to 54,639 in the year-ago period.

However, passenger vehicle registrations rose by only 1% to 2.57 lakh from 2.55 lakh in the year-ago period. But commercial vehicles dropped by 8% to 77,394 registrations versus 84,040 in November last year, data released by FADA showed.

That took overall vehicle registrations to 21.05 lakh, up 2% from 20.54 lakh in November 2018.

Stocks in Spotlight:

Hikal surged 15.49% to Rs 117.40. The company's pharmaceutical manufacturing facilty located at Panoli, Gujarat, was recently inspected by US FDA from 9 to 13 September 2019. The inspection confirmed the site to be compliant with the principles and guidelines of CGMP. The inspection ended with zero 483 observations and the company received EIR on 12 December 2019, classifying the facility under NAI for CGMP compliance.

Shares of Reliance Industries rose 0.28% to Rs 1567. RIL announced that its wholly owned subsidiary Reliance Strategic Business Ventures has acquired NowFloats for a cash consideration of Rs 141.63 crore. The said investment represents 85% holding of NowFloats. Nowfloats offers SaaS solutions to Small and Medium Enterprises (SMEs) that enable them to get a digital presence. Other solutions include local content discovery platform, online business management suite, website promotion / marketing solutions, and various other offerings for SMEs. It has operations in India.

Larsen & Toubro rose 1.21% to Rs 1278.90. L&T company won an order from Rail Vikas Nigam (RVNL) for the construction of Rishikesh - Karanprayag Tunnel in the state of Uttarakhand. The company classified the contract size in the range of Rs 1000 - 2500 crore.

Infosys fell 2.79% to Rs 700.70 after the Schall Law Firm, a US-based shareholder rights litigation firm, announced the filing of a class action lawsuit against Infosys in a US court.

According to the Complaint, Infosys made false and misleading statements to the market. Infosys used improper recognition of revenue to boost short-term profits. CEO Salil Parekh skipped standard reviews of large deals to avoid accounting scrutiny. In fact, the company's finance team was pressured to hide details of these deals and other accounting matters from auditors and the company's board of directors. Based on these facts, the company's public statements were false and materially misleading throughout the class period. When the market learned the truth about Infosys, investors suffered damages, the law firm said in a statement.

Maruti Suzuki India added 0.14% to Rs 7001.45. The company said it has partnered with Federal Bank to provide dealer finance and customised auto retail financing. In August 2019, Maruti Suzuki India had inducted Federal Bank as an approved partner for dealer inventory funding. The latest tie-up for retail financing to customers will further offer comprehensive loan access facilities to Maruti Suzuki dealers as well as customers.

Tata Consultancy Services rose 1.62% to Rs 2074.25. The IT major announced announced a new partnership with Flisa Smart Factory, part of the Finnish telecommunications company Elisa, to market and deploy the latter's industrial loT (lloT) and advanced analytics solutions to a wide range of manufacturers across the world.

Nestle India advanced 0.31% to Rs 14112. The National Anti-profiteering Authority (NAA) has imposed a penalty of Rs 90 crore on Nestle India for not providing the benefits of rate cuts to consumers. Nestle India clarified that it took appropriate measures to pass on commensurate benefits of GST to its consumers. The FMCG major said it will consider appropriate actions post studying the NAA order.

Edelweiss rose 2.06% to Rs 114 after Bharat Bond ETF managed by Edelweiss Mutual Find will be open for investment from 12 December 2019 to 20 December 2019.

Edelweiss Asset Management Company, a subsidiary of Edelweiss Financial Services, launched the first ever bond exchange traded fund (ETF). The bond ETF will have two variants - one scheme maturing after three years (2023) and another after 10 years (2030). The ETF will carry expense ratio of 0.0005%. The fund will invest in a portfolio of bonds of CPSE, CPSU, CPFI or any other government organizations. The first tranche would be only for 'AAA'-rated bonds.

Cipla advanced 2.56% to Rs 461.20. The pharmaceutical company said Avenue Therapeutics Inc., USA, a company focused on the development of intravenous tramadol for the US submitted a New Drug Application (NDA) to the US FDA for IV tramadol for the management of moderate to moderately severe pain in adults in a medically supervised health care setting. Avenue Therapeutics, Inc. Is an associate company of Cipla.

Vodafone Idea rose 1.20% to Rs 6.77. The company denied reports about negotiations are taking place with Brookfields or Edelweiss to sell some assets. The fact that the company intends to monetize its optic fibre business and data centre was disclosed in the quarterly report sent to the Stock Exchanges on 14 November 2019.

Shares of AAVAS Financiers added 3.72% higher at Rs 1908. The company's board approved the issuance of NCDs with a face value of Rs 10 lakh each, aggregating up to an amount of Rs 460 crore.

Ujjivan Small Finance Bank was trading at Rs 56.40, at a premium of 52.43% over the initial public offer price of Rs 37. The stock debuted at Rs 58, premium of 56.76% to IPO price. So far the stock hit a high of Rs 62.8 and low of Rs 53.1. On BSE, 1.52 crore shares were traded on the counter so far.

Foreign Markets:

Shares in Europe and Asia edged higher on Thursday after US Fed signaled rate settings were likely to remain accommodative, but the imminent UK election and a deadline for Sino-US trade talks kept investors cautious.

The European Central Bank (ECB) will announce its latest monetary policy decision on Thursday afternoon, marking a debut for new President Christine Lagarde. Investors will be watching closely for hints on future policy decisions and indications as to whether Lagarde will continue in the same vein as her predecessor, Mario Draghi.

Futher, in U.K., voters head to the polls on Thursday in the country's second general election since the landmark vote to leave the European Union in 2016. The election promises to be pivotal for the fate of Brexit and the country's economic policy.

In US, stocks closed slightly higher on Wednesday as investors digested a cautious message from the Federal Reserve, while continuing to monitor progress on China-US trade talks.

The U.S. central bank left interest rates unchanged on Wednesday, a decision that was largely anticipated capping a year where the Fed cut its benchmark rate three times. The central bank also indicated it does not expect any policy changes through at least 2020.

Meanwhile, US market is hoping for a delay on an increase in 15 December tariffs on some $160 billion of consumer goods from China.

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