Key gauges hit record closing highs

Indian equity benchmarks surged to record closing highs on Wednesday, led by gains in NTPC, Bharti Airtel and HCL Technologies. Key indices made positive start and stayed in green for whole day, as India’s merchandise exports rose by 45.76% in August 2021 as compared to same period of last year on account of healthy growth in segments like engineering, petroleum products, gems and jewellery and chemicals. Some support also came in with report that the Finance Ministry has permitted 11 states to borrow an additional amount of Rs 15,721 crore after these states achieved the capital expenditure target set for the June quarter. These states are Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand. Sentiments remained up-beat with Union Minister for Road Transport and Highways’ statement that the bilateral trade between India and the US has grown from $16 billion to $149 billion in the last two decades. He said, the trade is projected to reach $500 billion by 2025.

Markets extended gains in late afternoon session to end near intraday highs, taking support from private report stating that India remains an attractive destination for foreign direct investments (FDI) on account of healthy prospects of economic growth and its skilled workforce. Additional support also came after Textiles Ministry Additional Secretary Vijoy Kumar Singh has said that the idea of Production Linked Incentive (PLI) Scheme, announced for textiles by the government, was to create huge employment opportunities and extend support to companies that were interested in scaling up business in the sector. He said the advantage of PLI Scheme is to invest in those projects, which are covered under the scheme for the products, and create huge employment and achieve production turnover for companies. Meanwhile, the GST Council might on Friday consider taxing petrol, diesel, and other petroleum products under the single national GST regime, a move that may require huge compromises by both central and state governments on the revenues they collect from taxing these products.

On the global front, Asian markets settled mostly lower on Wednesday, while European markets were trading mostly in red as weak industrial output and retail sales data from China reinforced investor worries about slowing growth globally. China's retail sales grew only 2.5 percent on a yearly basis in August - much weaker than July's 8.5 percent growth and the expected rate of 7 percent as the outbreak of Delta variant weighed on consumption. Industrial production grew moderately by 5.3 percent year-on-year in August, but slower than the 6.4 percent increase seen in July and the economists' forecast of 5.8 percent amid supply chain bottlenecks and higher raw material costs. Back home, on the sectoral front, Cement industry’s stocks were in watch as the rating agency Icra said cement production declined 12 per cent to 82 million tonne in April-June 2021-22 compared to the previous quarter as COVID-induced lockdowns in various states impacted demand. 

Finally, the BSE Sensex rose 476.11 points or 0.82% to 58,723.20 and the CNX Nifty was up by 139.45 points or 0.80% to 17,519.45.    

The BSE Sensex touched high and low of 58,777.06 and 58,272.82, respectively and there were 21 stocks advancing against 9 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.65%, while Small cap index was up by 0.86%.

The top gaining sectoral indices on the BSE were Telecom up by 3.45%, Utilities up by 2.29%, PSU up by 2.05%, Power up by 2.01%, TECK up by 1.81%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were NTPC up by 7.16%, Bharti Airtel up by 4.53%, HCL Technologies up by 2.86%, Titan Company up by 2.83% and SBI up by 2.49%. On the flip side, Axis Bank down by 0.38%, Asian Paints down by 0.31%, Ultratech Cement down by 0.27%, Nestle down by 0.16% and Sun Pharma down by 0.15% were the top losers.

Meanwhile, the Finance Ministry has permitted 11 states to borrow an additional amount of Rs 15,721 crore after these states achieved the capital expenditure target set for the June quarter. These states are Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand.

The Ministry stated ‘11 states...have achieved the target set by the Ministry of Finance for the capital expenditure in the 1st Quarter of 2021-22. As an incentive, these States have been granted permission by the Department of Expenditure to borrow an additional amount of Rs 15,721 crore.’ The additional open market borrowing permission granted is equivalent to 0.25 per cent of their Gross State Domestic Product (GSDP). Additional financial resources thus made available will help the States in pushing their capital expenditure further.
It said capital expenditure has a high multiplier effect, enhances the future productive capacity of the economy, and results in a higher rate of economic growth.

Accordingly, out of the net borrowing ceiling (NBC) of 4 per cent of GSDP for the states for 2021-22, 0.50 per cent of GSDP was earmarked for incremental capital expenditure to be incurred by the States during 2021-22. The target for incremental capital expenditure for each state to qualify for this incremental borrowing was fixed by the Department of Expenditure.

The CNX Nifty traded in a range of 17,532.70 and 17,386.90 and there were 35 stocks advancing against 15 stocks declining on the index.     

The top gainers on Nifty were NTPC up by 7.46%, Bharti Airtel up by 4.80%, Coal India up by 3.98%, ONGC up by 3.87% and Titan Company up by 3.03%. On the flip side, Tata Consumer Product down by 0.95%, Nestle down by 0.55%, Grasim Industries down by 0.49%, BPCL down by 0.38% and Asian Paints down by 0.37% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 28.04 points or 0.42% to 6,624.93 and Germany’s DAX decreased 15.97 points or 0.1% to 15,707.02, while UK’s FTSE 100 increased 5.95 points or 0.08% to 7,040.01.

Asian markets settled mostly lower on Wednesday, tracking weakness in the Wall Street performance overnight due to increasing likelihood of a corporate tax rate hike from the current 21% to 26.5%. Chinese shares ended lower due to raised concerns over China’s economic recovery following weak factory and retail activity data, while fears over the rapid spread of the Delta strain of Covid-19 in the region also weighed on sentiment. China's Ministry of Housing and Urban-Rural Development has said major banks that Chinese property giant Evergrande Group won’t be able to pay loan interest due September 20, underlining the broadening impact of the property developer’s liquidity crisis. Further, Japanese shares declined on profit booking after a strong rally over the last two weeks.

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