Sensex, Nifty jump on fiscal stimulus hopes; Vedanta, Yes Bank top gainers

Buoyed by reports that the government may withdraw the higher tax surcharge on foreign portfolio investors (FPIs) and announce fiscal stimulus for the economy, Sensex and Nifty logged gains after the three consecutive sessions of losses on August 23.

Later in the day, the Finance Minister announced the withdrawal of enhanced tax surcharge on FPIs as well as domestic investors.

“In order to encourage investment in capital market, it is decided to withdraw enhance surcharge on FPIs. Surcharge on domestic investors in equity also goes. Pre-budget position is restored,” said Nirmala Sitharaman.

Positive global cues also gave a leg up to the market sentiment. Global stocks logged gains ahead of Federal Reserve Chair  Jerome Powell’s comment in Jackson Hole, Wyoming, which is expected to give clues on whether the US central bank will go for more rate cuts this year.

The rupee showed signs of improvement whereas global crude oil prices eased further, which also influenced the mood of the market.

Recovering from its lowest level since December 2018, the Indian rupee closed 15 paise higher at 71.66.

The 30-share pack Sensex closed with a gain of 228 points, or 0.63 percent, at 36,701.16, with 22 stocks in the green.

Vedanta, Yes Bank, ONGC, Mahindra & Mahindra and Tata Steel ended as the top gainers in the Sensex index, rising between 6.55 percent to 3.43 percent.

On the flip side, IndusInd Bank, ITC, ICICI Bank, Hindustan Unilever and Power Grid Corporation settled as the top losers in the Sensex kitty, falling between 1.90 percent to 0.69 percent.

BSE Midcap and Smallcap indices closed 0.93 percent and 0.55 percent higher, respectively.

The Nifty index settled 88 points, or 0.82 percent, higher at 10,829.35, with 41 stocks up and 9 down. Nifty Bank closed with a loss of 76 points, or 0.28 percent, at 26,958.65.

The overall market capitalisation of BSE listed firms jumped to Rs 1,37,92,486.60 crore on August 23 from Rs 1,36,66,251.05 on August 22, making investors richer by Rs 1.26 lakh crore in a single day.

However, on a weekly basis, Sensex suffered losses for the second consecutive week. Both Sensex and Nifty lost nearly 2 percent during the week.

Nifty Bank plunged 4.5 percent during the week, marking its biggest weekly fall in 11 months.

Top news of the day:

Finance Minister Nirmala Sitharaman withdraws tax surcharge on gains of FPIs and domestic investors.

Prime Minister Narendra Modi addresses the Indian community at the UNESCO headquarters in Paris, said India would focus not only on ease of doing business but also on ease of living.

SC grants interim protection to Chidambaram in ED case, but no relief in CBI matter.

The Supreme Court issues notice to the government on a petition challenging the constitutional validity of ‘The Muslim

Women (Protection of Rights on Marriage) Act, 2019 that criminalises instant triple talaq, according to a report in The Indian Express.

ED raids at the premises of Jet Airways founder Naresh Goyal in Delhi and Mumbai.

Meanwhile, Air India is seeking Rs 2,500 crore in emergency debt funding from the government, reported The Times of India.

Stocks in news:

Shares of DLF gained 5.37 percent to end the day at Rs 152.05 on BSE after global brokerage CLSA maintained buy recommendation on the stock with a target price of Rs 228, implying 58 percent potential upside from current levels. “News flow risk remains in the near term, but post significant deleveraging, risk profile is lower than before,” the global brokerage said.

Shares of Maruti Suzuki India rebounded to end the day in green after falling nearly 3 percent intraday. The stock ended 0.69 percent higher at Rs 6,250 even as the company recalled its seasoned hatchback WagonR to rectify possible defects.

Shares of Yes Bank rallied 5.24 percent to Rs 59.25 after a media report indicated that the lender is expected to consider raising funds again soon.

Shares of Future Retail plunged 5.67 percent to Rs 390 after the company said Amazon will acquire 49 percent stake in Future Coupons. Morgan Stanley has maintained overweight call on the stock with a target at 660 per share.

Shares of Edelweiss Financial Services fell 6.79 percent to settle at Rs 99.50 after hitting 32-month low of Rs 93 despite it clarified on investment made by its Asset Reconstruction Company in Kohinoor Group.

Global markets:

World stock markets and the dollar rose as investors looked to a speech by Federal Reserve chair Jerome Powell for clarification on whether the US central bank remains on course to deliver another interest rate cut in next month, Reuters reported.

China’s yuan recovered some ground after hitting an 11-1/2 year low. Most of the Asian markets ended higher.

Nikkei added 0.40 percent to end at 20,710.91, Kospi slipped 0.14 percent to 1,948.30 and Shanghai Composite gained 0.49 percent to settle at 2,897.43.

Technical view:

Nifty formed a bullish piercing candle on daily chart which is strong bullish reversal candle pattern by nature. Analysts say if the index manages to hold above 10,865 then a good move can be expected in the index.

“Immediate support for nifty is near 10,770-10,700 while resistance is near 10,900-10,980. Nifty bank closed the day at 26,959 with a loss of 76 points and formed doji candle pattern on the daily chart, immediate support for Nifty Bank is near 26,735-26,550 and resistance is near 27,200-27,400,” said Rohit Singre, Senior Technical Analyst, LKP Securities.

The selling pressure abated as the index neared the key support level of 10,600, which is near the lower end of the consolidation that Nifty witnessed in January-February this year.

“The larger structure shows that this is nothing but a pullback and is likely to subside near the crucial hourly moving averages at 10,850-10,900. Hence, ‘sell on rise’ would be the recommended strategy going ahead. On the downside, the overall target of 78.6 percent retracement of the October– June rally at 10,455 remains intact,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan by BNP Paribas.Subscribe to Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get PRO for 1 year at price of 3 months at 289. Use code FREEDOM.