The market ended with strong gains on Monday, mirroring moves in other Asian stock markets on hopes of progress in the US-China trade talks. US national security adviser Robert O'Brien on Saturday said an initial trade agreement with China was still possible by the end of the year.
The barometer index, the BSE Sensex, climbed 529.82 points or 1.31% to 40,889.23, its record closing high. The Nifty 50 index jumped 164.60 points or 1.38% to 12,079.
Among index pivotals, Reliance Industries (RIL) rose 0.92% to Rs 1560.70. HDFC rose 2.57% to Rs 2293.85. Axis Bank rose 3.10% to Rs 754.80.
The Sensex scaled fresh record high of 40,931.71 in late trade as hectic buying was seen in select stocks 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.
The market breadth was positive. On the BSE, 1413 shares rose and 1086 shares fell. A total of 208 shares were unchanged.
In the broader market, the BSE Mid-Cap index rose 1.17% and the BSE Small-Cap index rose 0.81%.
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.
Foreign Markets:
Overseas, shares in Europe and Asia edged 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.
Buzzing Index:
The Nifty Metal index jumped 3.09% at 2,598.95. Steel producers were in demand 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 7.24%), Tata Steel (up 4.99%), JSW Steel (up 3.58%), 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.
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.
Among other metal shares, Hindustan Copper, Hindalco Industries, NALCO, NMDC, Vedanta and Hindustan Zinc were up by between 0.99% to 4.73%.
MSCI Rejig:
DLF (up 1.69%), HDFC Asset Management Company (down 3.14%), Berger Paints India (up 2.63%), SBI Life Insurance Co (up 1%), Siemens India (up 2.09%) and ICICI Prudential Life Insurance Co (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 2.45%), UltraTech Cements (up 0.84%) and Nestle India (up 2.10%) will replace Yes Bank (down 1.70%), Vedanta (down 2.74%), Tata Motors (up 2.31%) and Tata Motors DVR (up 2.15%) 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 4.36%), Info Edge (India) (up 0.71%) and SBI Life Insurance Co (up 1%) will replace Glenmark Pharmaceuticals (up 1.72%), Cadila Healthcare (up 2.15%) and Edelweiss Financial Services (up 4.73%) 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 2.12%) and Indiabulls Ventures (up 2.77%) from the index.
Corporate Updates:
Telecom major Bharti Airtel rose 7.20% to Rs 451.30 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.
Zee Entertainment Enterprises (ZEEL) fell 3.98% to Rs 343.65. The media firm 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 was made before market hours today.
Power Grid Corporation of India (PGCIL) rose 0.18%. 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).
Unichem Laboratories surged 12.08% after the company announced that it has received ANDA (abbreviated new drug application) approval for its Atenolol tablets (25/50/100 mg) from United States Food and Drug Administration (USFDA). The drug is generic version of Tenormin tablets of Alvogen Malta Operations and is used for the treatment of hypertension, to lower blood pressure. The product will be commercialized from Unichem's Ghaziabad plant. The announcement was made after market hours on Friday, 22 November 2019.
Indoco Remedies rose 3.65%. The company announced before market hours on Monday, 25 November 2019, that it has received an 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 Goa. The inspection was carried out between 7th and 15th October 2019. This was a pre-approval inspection for a sterile injectable product, with 2 observations on Form 483s, which is now concluded as closed. The inspection classification of this site has been determined as VAI (Voluntary Action Indicated) by the USFDA.
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 5.82%. 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.
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.
Economy:
India's GDP data for September quarter is scheduled to be published on 29 November 2019. Ratings firm ICRA expects further deterioration in the growth of India's GDP to 4.7% in Q2 of FY2020, due to weakening momentum in the industry.
The Organisation for Economic Co-operation and Development (OECD) on Thursday cut India's economic growth forecast for 2019 to 5.8%, but said it would pick up to 6.2% in 2020 and further to 6.4% in 2021. India's economy grew 6.8% in FY19.
The World GDP growth is expected to be 2.9% this year - its lowest annual rate since the financial crisis - and remain at 2.9%-3.0% in 2020 and 2021, the OECD said on Thursday in an update of its forecasts. Global GDP expanded 3.5% in 2018.
Trade conflict, weak business investment and persistent political uncertainty are weighing on the world economy and raising the risk of long-term stagnation. Any further escalation of the trade conflict would disrupt supply networks and weigh on confidence, jobs and incomes. Uncertainty about a future EU-UK trade relationship poses a further risk to growth as does the current high level of corporate debt, it added.
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