Market posts biggest single-day gain in 10 years; investors richer by Rs 7 lakh crore

Market benchmarks Sensex and Nifty posted their biggest single-day gains in 10 years on September 20 after Finance Minister Nirmala Sitharaman announced a cut in corporate tax rates.

After starting the session on a flat note, Sensex surged 2,285 points while Nifty soared 677 points. Nifty Bank jumped over 2,661 points intraday as market experts and brokerages hailed the government’s move.

The sharp rally in equities made investors richer by Rs 6.83 lakh crore in a single day as the cumulative market capitalisation of BSE listed firms jumped to Rs 1,45,37,378.01 crore from Rs 1,38,54,439.41 crore on the previous session.

The government’s move of slashing corporate tax rate will have a chain effect and bodes well for the market in the long term, Rajat Rajgarhia, Managing Director & CEO of Motilal Oswal Financial Services, told CNBC-TV18.

“This is huge for the market. There were few announcements that were keeping sentiments in check as FM was trying to boost market sentiments and improve the state of the economy by boosting exports, banks consolidation, recapitalization and so on but reducing the corporate tax rate to 22 percent or domestic players and 15 percent for new entrants setting up

manufacturing units is a big boost,” said Mustafa Nadeem, CEO, Epic Research.

Sensex closed with a massive gain of 1,921 points, or 5.32 percent, at 38,014.62, with 25 stocks ending in green and 5 in the red.

Hero MotoCorp, Maruti Suzuki, IndusInd Bank, Bajaj Finance and State Bank of India emerged as the top gainers in the Sensex index.

On the other hand, Power Grid, Infosys, Tata Consultancy Services, NTPC and Tech Mahindra closed in the red in the Sensex index.

Nifty closed at 11,274.20, up 569 points or 5.32 percent. Among the 50 stocks in the index, 44 logged gains and only six closed with losses.

BSE Midcap index outperformed Sensex, ending with a gain of 6.28 percent. However, the Smallcap index underperformed the benchmark as the index closed 3.94 percent up.

Barring BSE IT and Teck, all sectoral indices closed with gains. BSE Auto jumped 9.85 percent, ending the day as the top gainer among sectoral indices, followed by BSE Bankex (up 8.21 percent) and Capital Goods (up 7.93 percent).

IT stocks came under pressure after rupee grew stronger against the US dollar. The Indian currency settled 38 paise higher at 70.94 per dollar.

For the week, Sensex climbed 1.68 percent while Nifty advanced 1.80 percent.

Top news of the day:

In order to promote growth and investment, Finance Minister Nirmala Sitharaman on September 20 slashed the effective corporate tax from 30 percent to 25.17 percent, inclusive of all cess and surcharges for domestic companies.

The meeting of the Northern Zonal Council chaired by Union Home Minister Amit Shah began on September 20 morning. The grouping comprises Haryana, Himachal Pradesh, Punjab, Rajasthan, Jammu and Kashmir, Ladakh and the National Capital Territory of Delhi.

Bihar Chief Minister Nitish Kumar made it clear that his party will contest the 2020 state assembly polls together with the BJP as an ally of the NDA, reported IANS.

Senior BJP leader Chinmayanand was arrested by the Special Investigating team (SIT) probing the rape charges against him.

Stocks in news:

Shares of HDFC Bank surged 9.06 percent to Rs 1,200.10 on BSE on September 20 after the government announced corporate tax rate cut. Rajat Rajgarhia, Managing Director & CEO at Motilal Oswal Financial Services told CNBC-TV18 that most private banks would be immediate beneficiaries of the tax cuts announced today.

Shares of HDFC climbed 3.92 percent to Rs 2,052.10 after it said it will raise up to Rs 3,000 crore by issuing bonds to augment its long-term resources.

Shares of Yes Bank rose 2.40 percent to Rs 55.45, a day after Morgan Credits (MCPL), part of the promoter group of the company, sold 2.3 percent shareholding in the bank.

Extending their losing spree into the fifth consecutive session, shares of Zee Entertainment Enterprises closed 2.49 percent lower at Rs 301.10, following reports that the promoter has been restricted from selling stake in the media company.

Shares of Dewan Housing Finance Corporation (DHFL) remained on the downward trajectory for the fourth consecutive day. The stock closed 8.63 percent down at Rs 43.40 even as it received proposals to act as development managers in certain large projects.

Global Updates:

World shares rose on Friday as stimulus measures by major central banks eased worries about growth, especially in Asian markets, while oil headed for its best week since January, reported Reuters.

Asian market ended slightly higher. Shanghai Composite Index closed 0.24 percent up at 3,006.45, while Kospi closed at 2,091.52, up 0.54 percent. Nikkei settled 0.16 percent higher at 22,079.09.

Technical view on the market:

Nifty formed a long bull candle today, that has engulfed up the range of the last 4 weeks in a single day. The key overhead resistance of 11,150-180 has been broken on the upside and the Nifty closed above it.

“We observe an upside breakout as per weekly timeframe chart, after the consolidation movement of the last one month. The near term trend of the Nifty seems to have reversed up sharply and more upside could be in store in the coming weeks. Having reached the swing high of 11,381 in today’s session, one may expect next upside targets of 11,600 for the next 1-2 weeks,” said Nagaraj Shetti – Technical & Derivative Analyst, HDFC securities.Get access to India’s fastest growing financial subscriptions service Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the website or mobile app.