Sensex jumps 793 pts, Nifty tops 11k; banks, NBFCs log gains

The Indian equity market logged biggest single-day gain in three-month as investors embarked on a buying spree on August 26, propelled by market-friendly announcements by the Finance Minister.

From the withdrawal of the tax surcharge to the revision in rules for the auto sector, the government announced a slew of measures to give a fillip to investor sentiment and boost the economy. The steps are widely seen in a positive light by most brokerages and analysts.

The signs of an ebb in the US-China trade war also offered relief to the participants. The United States and China sought to ease trade war tensions on August 26, with Beijing calling for calm and US President Donald Trump predicting a deal after markets fell in response to new tariffs from both countries, Reuters reported.

The 30-share Sensex closed with a robust gain of 793 points or 2.16 percent at 37,494.12, with 22 stocks in the green. Nifty closed 229 points, or 2.11 percent higher at 11,057.85. Among the 50 stocks in the Nifty index, 37 logged gains.

Bank and NBFC heavyweights, including HDFC twins, Bajaj Finance, Yes Bank, ICICI Bank, State Bank of India, Axis Bank and Kotak Mahindra Bank logged healthy gains, underpinning the market benchmarks.

However, metal and auto stocks, including Tata Steel, Hero MotoCorp, Vedanta, Tata Motors, Maruti Suzuki and Bajaj Auto ended the day as the losers in the Sensex kitty.

Barring BSE Metal, all sectoral indices on the BSE ended in the green, with BSE Finance (up 3.86 percent), BSE Realty (up 3.60 percent) and BSE Bankex (up 3.57 percent) as the top gainers.

The BSE Midcap and Smallcap indices settled 1.57 percent and 1.65 percent up, underperforming benchmark Sensex.

The rally in equities lifted the cumulative market-capitalisation of BSE listed firms to Rs 1,40,33,476.95 crore from Rs 1,37,92,486.60 on the previous session, making investors richer by Rs 2.41 lakh crore in a single day.

Top news of the day

-Supreme Court refused to entertain Chidambaram’s plea against the dismissal of anticipatory bail.

-Trump said China talks coming, Beijing calls for the trade war resolution, reported Reuters.

-G7 summit final day; Trump signalled easing of tensions over China, Iran.

-Nomura upgraded India to ‘overweight’, BNP sees Sensex at 40,500 by December.

Stocks in news

Shares of most housing finance companies gained after the Finance Minister announced additional liquidity support to  HFCs Rs 20,000 crore by NHB thereby increasing it to Rs 30,000 crore to support to non-banking financial companies (NBFCs) and housing finance companies (HFCs). Shares of DHFL (up 12.02 percent), GIC Housing Finance (up 7.52 percent),

HDFC (5.24 percent), Reliance Home Finance (up 4.88 percent), Indiabulls Housing Finance (up 4.35 percent) and Can Fin Homes (up 2.09 percent) ended the day with healthy gains.

Shares of Capacite Infraprojects rose 8.08 percent to Rs 191.30 after the company said no irregularities were found during the I-T search operation. The Income Tax Department conducted a search at the premises of the company under section 132 of the Income Tax Act, 1961, which concluded on August 25, 2019.

Shares of NCL Industries rose 4.94 percent to close at Rs 110.40 as the company signed an agreement with Chinese firm Qingdao Xinguangzheng Steel Structure Company for manufacturing pre-engineered steel structure in India.

Shares of Unichem Laboratories declined 0.90 percent to Rs 171.10 after the company received one observation from USFDA.

Shares of Tamil Nadu Newsprint and Papers rallied 5.81 percent to Rs 190.40 after HDFC Mutual Fund increased its stake in the company by 2.5 percent last week.

Global markets

Asian shares sank as the latest salvos in the Sino-US trade war shook confidence in the world economy and sent investors steaming to the safe harbor of sovereign bonds and gold while slugging emerging market currencies, Reuters reported.

Hang Seng dropped more than 2 percent while the Shanghai composite shed 1.17 percent to about 2,863.57. Shenzhen component slipped 0.98 percent to 9,270.39.

Nikkei closed 2.17 percent lower to close at 20,261.04, while the Topix index declined 1.61 percent to 1,478.03. Kospi ended down 1.64 percent to close at 1,916.31 while Australia’s S&P/ASX 200 finished its trading day 1.27 percent lower at 6,440.10. European stocks traded mixed.

Technical view:

Nifty witnessed a sharp comeback today and closed the day with robust gains, forming a positive candle with long lower shadow. “This pattern indicates emergence of sharp upside bounce from the lows with high volatility. Today’s candle pattern seems to be a confirmation of a near term bottom reversal in the Nifty at 10,637 levels (August 23),” said Nagaraj Shetti – Senior Technical & Derivative Analyst at HDFC securities.

The short term trend of Nifty is positive and the market is now likely to head towards the key overhead resistance of 11,150 levels in the next few sessions (resistance as per change in polarity principle). This hurdle is going to be a crucial and a decisive move above this area could lead Nifty towards the next upside levels of 11,450-500 in the near-term, Shetti added.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.