Benchmarks Begin New Samvat With Highest Closing

Mumbai, October 29: It seems “Happy Days are Here Again” for the market and “All is going to be well” soon for the stock market. For the first time in last 13 years the benchmark indices have closed with huge gains (in terms of points gained), on the first trading day of new Samvat 2076. 

The Sensex and the Nifty of BSE and NSE respectively gained 1.48 per cent (582 points at 39,832 points) and 1.37 per cent (160 points at 11,787 points) on Tuesday. Since 2007 till 2018, it was only on three occasions (2008 0.4 per cent, 2011 three per cent (464 points) and 2017 0.4 per cent) benchmarks have given positive closing on the first day of new Samvat. On all other occasions between 2007 and 2018, the benchmark has lost in the range of 0.2 per cent to 1.3 per cent.

Vinod Nair, Head of Research, Geojit Financial Services said, “Reforms from government, boost from festival season and accommodative factors like fall in oil prices, positive developments from global market and likely reversal of growth in the second half of the year, Indian equity market will have a positive momentum in the long-term”.

There was more than one reason for the markets to cheer up. The first one was positive cues from the centre with respect to cut in tax rates related to stock trading like ling term capital gains (LTCG), short term capital gains (STCG) and securities transaction tax (STT). 

S Ranganathan, Head of Research at LKP Securities said, "Markets buoyed today led by hopes of divestment and tax cuts as a slew of midcaps and under-owned stocks staged a smart upmove".Another reason was announcement by Reliance Industries Ltd (RIL)’s Management to make its telecom venture RJIO a debt free company by March 2020. This took RIL stock to a new high and RIL carrying highest weight in the benchmark indices, both of them shot up.Sensex and Nifty rose to 4-month highs on October 29, while Midcap and Nifty Bank touched 1-month highs. Nifty is now 316 points and Sensex is 480 points away from their record highs achieved in June 2019.Market logged healthy gains as sources indicated that the government is reviewing equity-related tax rate rationalisation. 

Market breadth was also in favour of advances; the advance-decline ratio was at 3:2.

Sandeep Nayak, ED & CEO of Centrum Broking said, “The recently concluded festive season has resulted in a turnaround in sentiment with the Auto sector especially, which was quite stressed, has witnessed improved sales driven by a competitive pricing strategy adopted by many players. This combined with the twin positive developments of the trade pact between the 10 ASEAN members and a proposed review of key taxes such as LTCG, STT and DTT before the budget have added further impetus to investor sentiment”. 

 Barring BSE Telecom (down 4.39 per cent), all sectoral indices ended in the green, with Auto (up 4.25 per cent and Metal (up 4.19 per cent) leading. Telecom stocks fell the most after the Supreme Court broadened the definition on adjusted gross revenue (AGR). 

Bharti Airtel deferred Q2 earnings on AGR impact. The stock slipped 3 per cent while Bharti Infratel plunged 9 per cent, tracking the SC’s AGR order for telcos. Vodafone Idea finished with a loss of 8 percent.