Podcast | Taking Stock: Brexit deal helps Sensex climb 39K; investors wealth rose by Rs 1.5 lakh cr

Terrific Thursday on D-Street! The S&P BSE Sensex closed above 39,000, taking the index 17 sessions to add 1,000 points. The Nifty50 is also back above 11,500 for the first time since September 27.

The final tally on D-Street – the S&P BSE Sensex rose 453 points to 39,052 while the Nifty50 closed 122 points higher at 11,586, just a shade below 11,600 levels.

Investors wealth in terms of average market capitalisation on the BSE rose by Rs 1.59 lakh crore on Thursday to Rs 147.90 lakh cr compared to Rs 146.31 lakh crore seen on Wednesday, BSE data showed.

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Global cues helped bulls to climb crucial resistance levels on Thursday, which has now opened the door for the index to climb towards 11,700 levels.

Britain and the European Union have concluded a Brexit deal, said European Commission President Jean-Claude Juncker. The news itself removes uncertainty.

More than 30 stocks rose 10-50 percent since September 20 when Sensex was trading around 38,000. These include names like Adani Green, General Insurance, Siemens, Whirpool of India, NMDC, Bandhan Bank, and Biocon.

Auto stocks led the rally on the back of the news around Brexit which removed much uncertainty. The other reason which helped the bulls was – media reports that the transport ministry has issued draft guidelines for setting up authorised vehicle scrapping facilities as it looks to legalise the industry in India.

Dr VK Vijaykumar of Geojit Financial Services told Moneycontrol that — “Two major concerns for the global economy have been the trade skirmishes between US & China and a ‘no-deal Brexit.’ Early indications are that a Brexit deal has been done. This augurs well for the global economy.”

“If the US-China trade deal also happens that will be very good news for the global economy. Since markets are oversold this can lift spirits in the market,” he said.

Technical experts are of the view that the risk-taking ability is improving in the market with optimism over recovery in the economy led by stimulus, festive demand, good monsoon and lower interest rate. In fact, some feel that a new high is possible in this calendar year.

Cementing the sentiments, Finance Minister, Nirmala Sitharaman said that investors can find no better place in the world than India that has a democracy-loving and capitalist respecting environment — at an interaction session at the IMF’s headquarters.

Adding to the optimism – FIIs have also been net buyers for the past 4 trading sessions and have poured in more than Rs 2000 cr in Indian equity markets since October 11, provisional data showed.

Stocks & Sectors:
Sectorally, the S&P BSE Auto index rose 2.9 percent, followed by Consumer Discretionary that added 1.8 percent, and Bankex that rose 1.59 percent.

On the broader market front – S&P BSE Midcap index was up 1.77 percent, while the S&P BSE Smallcap index gained 0.89 percent.

Volume spike, which also saw long buildup, include names like TVS Motor, Motherson Sumi, Eicher Motors, and Tata Motors.

Blue chip stocks saw a rise in delivery percentage which includes names like ITC, HDFC, L&T, RIL etc. among others.

Top Nifty gainers: Tata Motors, Indiabulls Housing Finance, and YES Bank which were up more than 10 percent.

Tata Motors rallied more than 10 percent, after media reports suggested that the European Union and the United Kingdom have reached a deal on Brexit.

This is sentimentally positive for Tata Motors as fears of a No-deal Brexit were looming which would have led to adverse impact on JLR UK operations. Motherson Sumi also rose by a little over 9 percent.

After three consecutive sessions of losses, shares of Indiabulls Housing Finance (IBH) jumped about 14 percent on BSE, a day after the rating agency, CRISIL has reaffirmed its long-term and short-term ratings.

Shares of Bajaj Consumer Care surged for the second day, rising 11.61 percent to Rs 261.90, after its promoter offloaded stake through an open market transaction.

Extending the gains into the fifth consecutive session, shares of Bajaj Auto settled 2.96 percent higher at Rs 3,110.30 as the company is set to make a comeback in the scooter segment with the launch of an all-electric Chetak, the brand that made it India’s biggest two-wheeler company.

Shares of Eicher Motors, the maker of Royal Enfield motorbikes, rallied 6.66 percent to Rs 20,518 after global brokerage UBS upgraded its rating on the stock to buy from sell and also raised target price to Rs 23,000, citing likely volume growth in the second half of this financial year.

It took support near its 5-Days EMA and then bounced back. It has been acting as crucial support for the last 4 trading sessions which is a positive sign

For time being traders are advised to create fresh long positions in index with a stop below 11,430 on a closing basis and look for initial targets placed around 11,800, suggest experts.

The immediate resistance would be placed around 11700 levels, but some experts feel that there is a possibility that Nifty could hit new highs in this calendar year.Manav Chopra of Equity, Indiabulls Ventures Ltd said that the Nifty index may hit and test previous all-time highs before the calendar year. “11,100 is a new strong base for the index. In the near term, 11,450 is the support zone and traders should continue to be positioned on the long side,” he said.