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EQUITY
Post Session: Quick Review
Sep-25-2020

Friday turned out to be a fabulous day for Indian equity benchmarks, as both Sensex and Nifty ended with strong gains. After a positive start of the day, key indices remained higher for the whole day, amid report that the government has extended the suspension of insolvency proceedings for any COVID-19 related default by a period of three months, effective from September 25. The Insolvency & Bankruptcy Code (IBC) was suspended for a period of six months with effect from March 25, 2020, by the government earlier, to protect those experiencing financial distress on account of the pandemic. Some support also came with report that the Reserve Bank of India (RBI) has announced it will conduct simultaneous purchase and sale of government securities under open market operation (OMO) for an aggregate amount of Rs 10,000 crore each on October 1.

In the second half of the trading session, markets gained more traction to end near their intraday high points, after the Department of Expenditure, Ministry of Finance, has granted permission to raise additional financial resources of Rs. 9,913 crore to 5 States through Open Market Borrowings (OMBs). These States are Andhra Pradesh, Telangana, Goa, Karnataka and Tripura. This permission has been accorded after these States successfully met the reform condition of implementation of One Nation One Ration Card System. Traders took solace with International Monetary Fund’s (IMF) statement that Prime Minister Narendra Modi’s ‘Aatmanirbhar Bharat’ is an important initiative. The economic package under this self-reliant India initiative, which was announced in the aftermath of the coronavirus shock, has supported the Indian economy and mitigated significant downside risks.

On the global front, European markets were trading mostly in red as the continent grapples with a fresh wave of COVID-19 cases. Asian markets ended mostly in green, after Taiwan's retail sales rose for a second straight month in August. The official data showed that retail sales grew 8.17 percent year-on-year following a revised 2.79 percent increase in July. Automobile sales jumped 33.5 percent. Sales at non-specialized stores rose 5.7 percent, led by a 15.6 percent gain at convenience stores. Online and mail-order sales increased 16.4 percent. Sales of fuel and related products decreased 14.9 percent.

The BSE Sensex ended at 37388.66, up by 835.06 points or 2.28% after trading in a range of 36730.52 and 37471.17. There were 30 stocks advancing on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 2.90%, while Small cap index was up by 2.31%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 5.73%, TECK up by 4.02%, IT up by 3.63%, Auto up by 3.40% and Capital Goods up by 3.10%, while there were no losing sectoral indices on the BSE. (Provisional)

The top gainers on the Sensex were Bajaj Finserv up by 6.64%, HCL Tech. up by 5.30%, Bharti Airtel up by 5.15%, Larsen & Toubro up by 4.39% and Indusind Bank up by 4.38%, while there were no losers. (Provisional)

Meanwhile, the Department of Expenditure, Ministry of Finance, has granted permission to raise additional financial resources of Rs 9,913 crore to 5 States through Open Market Borrowings (OMBs). These States are Andhra Pradesh, Telangana, Goa, Karnataka and Tripura. This permission has been accorded after these States successfully met the reform condition of implementation of One Nation One Ration Card System.

As per the notification released by Ministry of Finance, Karnataka can now borrow additional Rs 4,509 crore, while Andhra Pradesh can raise Rs 2,525 crore, followed by Telangana at Rs 2,508 crore. Goa has been allowed to mop up Rs 223 crore from markets and Tripura Rs 148 crore. In view of the unprecedented COVID-19 pandemic the Central Government had in May, 2020 allowed additional borrowing limit of up to 2 percent of Gross State Domestic Product (GSDP) to the States for the year 2020-21. This made an amount up to Rs 4,27,302 crore available to the States.

One percent of this is subject to implementation of four specific State level reforms, where weightage of each reform is 0.25 percent of GSDP. These reforms are implementation of one nation one ration card system; ease of doing business reform; urban local body/ utility reforms; and power sector reforms. The remaining additional borrowing limit of 1 percent was to be released in two instalments of 0.50 percent each - first immediately to all the States as untied, and the second on undertaking at least 3 out of the above mentioned reforms. The Government of India has already granted permission to States to raise the first 0.50 percent as OMB in June, 2020. This made an additional amount of Rs 1,06,830 crore available to the States.

The CNX Nifty ended at 11050.25, up by 244.70 points or 2.26% after trading in a range of 10854.85 and 11072.60. There were 46 stocks advancing against 4 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bajaj Finserv up by 6.96%, Indusind Bank up by 5.02%, Cipla up by 5.00%, HCL Tech. up by 5.00% and Bharti Airtel up by 4.85%. On the flip side, SBI Life insurance down by 0.91%, BPCL down by 0.40%, UPL down by 0.10% and HDFC Life Insurance down by 0.03% were the top losers. (Provisional)

European markets were trading mostly in red, France’s CAC decreased 31.58 points or 0.66% to 4,731.04 and Germany’s DAX decreased 55.07 points or 0.44% to 12,551.50. On the flip side, UK’s FTSE 100 increased 6.11 points or 0.1% to 5,828.89.

Asian Markets ended mostly higher on Friday, tracking Wall Street gains overnight despite worries about surging corona virus pandemic cases globally. Further, hopes for new economic stimulus in the United States with encouraging housing data too supported market sentiment. New home sales occurred at a seasonally-adjusted, annual rate of 1.011 million, the Census Bureau reported . That represents a 4.8% increase from an upwardly-revised pace of 965,000 homes in July. Compared with last year, new home sales are up 43%. US Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin said that the new economic relief package could help households and businesses. Reports showed that US Democrats are drafting a new $2.4 trillion relief bill, aimed at resuming the stalled stimulus talks with Republicans. Shanghai shares fluctuated before settling tad lower amid worries over resurgence of covid-19 cases globally.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,219.42
-3.76
-0.12

Hang Seng

23,235.42
-75.65
-0.32

Jakarta Composite

4,945.79
103.03
2.13

KLSE Composite

1,509.14

8.34

0.56

Nikkei 225

23,204.62
116.80
0.51

Straits Times

2,472.28
21.46
0.88

KOSPI Composite

2,278.79
6.09
0.27

Taiwan Weighted

12,232.91
-31.47
-0.26
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