Hike in DA, banking financial help market break 6-day losing spree

Benchmark indices Sensex and Nifty logged strong gains after six consecutive days of losses as investor sentiment got a booster dose after the government announced a 5 percent hike in dearness allowance.

Experts said the hike in dearness allowance will boost consumer demand as it implies more money in the hands of over a crore government employees.

“The 5 percent hike in dearness allowance means more money in the hands of over a crore government employees which will increase their purchasing power. Hopes that the consumer demand will increase n the near-term pushed many heavyweight stocks higher,” said S Ranganathan, Head of Research at LKP Securities.

Stable global cues and rupee’s improved health also offered some support which propelled investors to embark on short- covering. The Indian currency erased all losses and rose up to 8 paise against the US dollar.

“The bulls staged a smart comeback led by short-covering and stable global cues,” said Ajit Mishra, Vice President – Research at Religare Broking.

Second-quarter earnings and global cues are the top triggers that will steer the market in the coming sessions.

“Going forward, the upcoming earnings season would dictate the trend for the Indian market. More than the earnings announcement, investors and traders would focus on the outlook by the management, especially for consumption-driven companies. On the global front, market participants would keep a close watch on trade talks between the US and China,”

Mishra added.

Sensex settled with a solid gain of 646 points, or 1.72 percent, at 38,177.95, with 22 stocks in the green and 8 in the red.

IndusInd Bank emerged as the top gainer in the index, followed by Bharti Airtel, ICICI Bank, State Bank of India and Mahindra & Mahindra.

On the flip side, Yes Bank, Hero MotoCorp, HCL Technologies, ITC and Tata Consultancy Services finished as the top losers in the index.

The Nifty pack closed the day 187 points, or 1.68 percent, higher at 11,313.30. Among the 50 stocks in the index, 38 stocks logged gains.

Among secondary barometers, BSE Midcap and Smallcap indices climbed 1.38 percent and 0.66 percent, respectively, underperforming the Sensex.

Among the sectors, BSE Telecom (up 4.92 percent), Bankex (up 3.67 percent), Finance (up 2.84 percent) and Metal (up 2.12 percent) closed with strong gains.

The cumulative market capitalisation of BSE-listed firms jumped to Rs 1,43,92,456.25 crore from Rs 1,42,26,083.26 crore of the previous session, making investors richer by Rs 1.66 lakh crore in a single day.

Top news of the day:

The Cabinet has hiked dearness allowance by 5 percent, Union Minister Prakash Javdekar announced on October 9. The move raises dearness allowance (DA) to 17 percent from 12 percent.

State Bank of India has cut interest rates on fixed deposits, a second in one month, by 10 basis points (100 bps=1 percentage point) on select maturities.

Arjun Bansal, the Vice President of artificial intelligence (AI) software and AI Lab at Intel, and Ankiti Bose, the CEO and co-founder of Zilingo, are two Indian-origin individuals featuring in Fortune’s 2019 ‘40 Under 40’ list.

Stocks in news:

Shares of IndusInd Bank surged 5.45 percent to Rs 1,309.50 on BSE on October 9, a day ahead of its September quarter earnings. Brokerages expect healthy set of numbers from the private sector lender.

Yes Bank suffered a loss of 5.26 percent to finish at Rs 43.20 after the lender denied media reports saying it is in talks with three technology companies including software major Microsoft for a strategic investment.

Shares of Tata Consultancy Services (TCS) ended the day with a loss of 1.57 percent at Rs 2,020.65 on the eve of second-quarter numbers. Brokerages are expecting a mixed set of numbers from the IT major.

Shares of Titan Company slipped 2.41 percent to Rs 1,229.05 as global financial firm Citi downgraded the stock to neutral after the company exhibited muted growth in the second quarter.

Share price of Lupin climbed 1.94 percent to Rs 681.75 after the pharma company received a good manufacturing practice (GMP) certificate from a Japanese regulator for its Mandideep facility.

Global update:

European stocks steadied on Wednesday, but sentiment remained fragile as negotiations for a Brexit withdrawal deal seemed all but dead and the US-China trade dispute triggered another round of selling, reported Reuters.

Among Asian peers, China’s Shanghai Composite Index ended 0.39 percent higher while Japan’s Nikkei dropped 0.61 percent.

Technical view on the market:

“After showing consistent weakness in the last six sessions, Nifty witnessed a sharp upside bounce today and closed the day with hefty gains. A long bull candle was formed today from near the crucial support of 11,100-11,050 levels, which is a previous upside breakout point of larger consolidation, as per the concept of change in polarity,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

“The Nifty showing sharp up move today could be a relief factor for bulls to make a comeback as per short-term basis. The near-term trend of Nifty remains negative, so there is a possibility of ‘sell on rise’ opportunity around 11,400-500 levels,” he added.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.