Stock Market Report (4-8 November)
BSE
Sensex was at its all-time high levels of 40,654, and Nifty was very close to
its all-time high and closed at 12,012 on Wednesday. Financials contributed the
most to Sensex’s gains. Private lender ICICI Bank with a gain of 2.64 per cent
contributed most to the rally at 76.86 points. Peer HDFC Bank (72.38 points)
and mortgage lender HDFC (64.83 points) came in next.
BY HARDIK GOEL | 2 Mins Read
It is to be noted that
despite poor macro numbers, the indices are determined to make new highs.
Common sense prevails that the all-time highs don’t make sense in a
deteriorating economic environment in India. India’s GDP grew by a mere 5% in
the June ending quarter, while the core infrastructure growth contracted by
5.2% in September. The manufacturing and services PMI numbers were equally bad
for October. The government data also showed that India’s fiscal deficit
reached 93% of the budget estimate for the period April-September in the
current fiscal year. This is worrisome for the Indian economy as the government
had aimed to keep the fiscal deficit target at 3.3% of GDP for FY2020. However,
it seems that markets are clearly ignoring these facts.
Reasons
- After announcing the historic reforms of corporate tax rate reduction to 22% announced in September, the government has also taken a few more decisive steps to revive the ailing economy. It seems that the markets are cheering several reforms announced by the government to date.
- The much-needed reforms to revive the real estate sector came yesterday, which the markets were expecting for the last couple of days.
- The investors are also expecting the government to revamp the income tax structure on equities, which has improved the sentiments in the markets.
- To add to the positive views, the earnings results announced by a majority of companies for the September ending quarter have largely been better than expectations.
- The positive global cues have also helped propel the Indian markets in the last few days. The Fed announced a rate cut of 25 bps last week came as a significant boost to the global markets. And the clear signs of progress in US-China trade talks are also propelling the global sentiments. The US and China have both hinted at canceling the tariffs imposed to date.
Analysts’ views
“Market clocked a new
high based on commitment from the FM to speed up reforms in the near future.
Realty and financials outperformed on expectations of new measures while metal
stocks gained owing to easing global trade war. Better results from
heavyweights kept expectations high for earnings growth, influencing investors
to stay in the market” -Vinod Nair, Head of
Research, Geojit Financial Services