Benchmark indices surged to yet another record on Monday with the Nifty surpassing its crucial psychological level of 8,500, driven by across-the-sector buying in large-sized companies, as China’s unexpected cut in interest rates on Friday spurred a rally in global markets.
The Sensex rose 0.58%, or 164.91, points to close at 28,499.54. The Nifty closed 0.62%, or 52.8 points, higher at 8530.15. Chinese markets advanced 2-3% to a three-year high while most Asian indices gained about 1% on Monday. People’s Bank of China cut the benchmark lending rate by 40 bps to 5.6% as well as the one-year deposit rate by 25 bps to 2.75%, amid hopes the reduction in rates will stimulate demand in the aftermath of decline in factory growth data and still weaker property markets.

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The rally in Indian markets was led by banking, metal, tech and power companies, exchange data showed. Aluminium producer Hindalco Industries rallied to a two-month high, while Tata Steel rose the most in three weeks. Tata Power, the biggest private sector generator, was the best performer. Infosys rallied to an all-time high after shareholders approved the issue of bonus shares and a stock dividend.
The broader markets, however, lacked optimism, indicating the gains may be restricted to front-line stocks as the Street awaits key economic data, the RBI bimonthly credit policy, the government’s reforms agenda in the winter session of the Parliament and the derivatives (F&O) expiry on Thursday.

Seventeen out of 30 Sensex companies ended in the green. However, the overall market breadth was weak, with 1,325 shares rising against 1,752 shares that ended in the red. BSE IT index gained 1.86% followed by BSE Metal index (+1.6%), BSE Realty (1.6%) and Bankex (1.18%). Tata Consultancy Services, the largest software exporter, rose 1.4% and Wipro, the third-biggest, increased 1.3%. Steel Authority of India advanced 3.9% whereas Jindal Steel & Power rallied 4.3% — the highest in the BSE Metal Index.

State Bank of India rose to a four-year high. ICICI Bank jumped 2.5% to an all-time high. HDFC Bank rose 1.3% to another record. “While the international scenario is helpful for India, the only hiccups in the rally could come from with in, the inability of the government to pass the bills in the Winter session of Parliament, that begins today. If the attitude of the Opposition is anything to go by, this will be an Herculean task for the NDA,” said Aseem Dhru, MD & CEO, HDFC Securities.

Foreign portfolio investors purchased shares worth $65.8 million in the cash segment on Monday, showed provisional data. Overseas investors have pumped in $1.5 billion so far in November — the biggest monthly inflow in equities compared with debt markets since April of this year.
The winter session of Parliament started on Monday, again stirring hopes the government will pass key bills to cut red tape and open the economy to further foreign investment. “We think India is the best game in town as far as emerging markets are concerned. The policy and political transition that India has could likely lead to a shift in its trajectory of growth,” said Manishi Raychaudhuri, head, India equity research, BNP Paribas Securities Asia in a TV interview.

China adds to metal stocks’ shine 

Metal stocks gained 1-4% on Monday, with analysts expecting a further rate cut by the People’s Bank of China to revive the Chinese economy. Aluminium and copper producer Hindalco rallied to a two-month high at R165.55 (3.4%). Zinc player Hindustan Zinc (3%), along with steel producer Tata Steel — which rose the most in three weeks to R476.60 (3%) — Jindal Steel (4.3%) and JSW Steel (2.74%), were in demand. The Sensex ended at its all-time high of 28,499.54 points with gains of 0.58%. The BSE Metal Index ended the session at 11,309.91, up 1.64%, after gaining as much as 2.6% during the day trade. JSPL led the metal pack with 5.9% intra-day gain.

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Hindalco and SAIL both gained as much as 4.9% in Monday’s trade. According to a Reuters report, traders expect China’s unexpected interest rate cut to boost demand and analysts feel another rate cut by the central bank could not be ruled out. The report cites World Bank data, which notes that China accounts for half of the metal consumption in the world. YTD, BSE Metal has gained 13.5%, under-performing the Sensex which has gained 34.6% during the same period. fe Bureau