Indian stocks rose on the expectation that a slowdown in economic expansion has bottomed out and growth will recover in 2020 on the back of Finance Minister Nirmala Sitharaman’s planned $1.5tn infrastructure push.
The S&P BSE Sensex climbed 0.1% to 41,306.6 points at the close in Mumbai yesterday. The NSE Nifty 50 Index also advanced by 0.1%.
Stocks have largely priced in a slowdown that’s seen the country’s economy growing at the slowest pace since 2013. Focus is shifting to whether a rally in the benchmark indexes will broaden out to the wider market, and which industries are most likely to benefit from a potential revival in GDP growth in India as well as globally.
“Information technology and bank stocks are some of the best ways to play the economic recovery,” said Prakash Pandey, who oversees investments and research at Plutus Advisors & Consulting Ltd in New Delhi. “In IT there is not much of a debt problem, compared to other sectors. Growth in business will go straight to the bottom line. Midcap banks also have a lot of potential to gain this year, partly by capitalising on non-bank lenders’ struggles.”
Ten of 19 sector sub-indexes compiled by BSE Ltd gained, led by a gauge of power companies. Half of the Sensex’s 30 shares rose. HDFC contributed the most to the index advance, increasing 0.8%, while Power Grid had the largest gain, climbing 2.8%
IndusInd Bank was the biggest drag on the index, declining 1.7%, Titan Co had the biggest drop, falling 2.8%.
Adani Green Energy gained 4.98% to Rs174.80 after it has commissioned its 75MW wind power project having Power Purchase Agreement with Maharashtra State Electricity Distribution Company (MSEDCL) at Rs2.85/kWh for a period of 25 years.
RattanIndia gained 4.62% to Rs2.04 after it completed a debt resolution of Rs6,574 crore through a one-time settlement scheme, led by a consortium of investors including Goldman Sachs and Varde Partners.
Through the deal, the firm’s consortium of 12 lenders led by Power Finance Corp Ltd (PFC) and State Bank of India Ltd (SBI), have agreed to take a 38% haircut against their exposure of Rs6,575 crore to RattanIndia Power’s 1,350 megawatt (MW) Amravati plant.
Sterling & Wilson Solar gains 3% to Rs338.25 as promoters repay Rs1,000 crore loans. Prince Pipes and Fittings gained 2.23% to Rs155.90 after the promoters have repaid Rs200 crore loan in escrow and there is no pledge or encumbrance on shares, the company said in a release on Tuesday.
Ircon International gained 2.76% to Rs413.10 said it has entered into a pact with BEML to explore and address opportunities in the overseas market.
Meanwhile the rupee yesterday strengthened against the dollar as the country’s current account deficit narrowed in the September quarter. Traders will watch geopolitical developments after North Korea said it was no longer bound to freeze major weapon tests.
Rupee closed at 71.23 a dollar, up 0.22% from its previous close of 71.38 yesterday. The currency opened at a 71.45 dollar, touching a high of 71.23 and a low of 71.45. India’s current account deficit narrowed in the September quarter, helped by a shrinking trade gap and an increase in earnings from services exports and remittances. The shortfall was $6.3bn in July-September, or 0.9% of gross domestic product, the Reserve Bank of India said on Tuesday.
The 10-year government bond yield stood at 5.505% from its Tuesday’s close of 6.555%. Many Asian markets are closed on account of new year. Japanese yen gained marginally, while Singapore dollar and Offshore Chinese renminbi were a tad down.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 96.951, up 0.58% from its previous close of 96.389.
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