Sensex, Nifty end at new record closing highs

Bulls made a strong comeback on Friday as traders opted to buy beaten down but fundamentally strong stocks after five consecutive sessions of drubbing. After making a positive start, key gauges continued to rally throughout to end the day at new record closing highs. This surge was fuelled by improved sentiment following robust performances in Telecom, Metal and TECK stocks, as well as significant rollovers to the August series. Broader indices also reflected this strength, showing substantial gains. The upbeat tone was evident from the start, with substantial buying in heavyweights across various sectors further driving the momentum. Traders took encouragement with Reserve Bank of India Deputy Governor M Rajeshwar Rao’s statement that Indian financial system looks stronger than in the past and the country's economy is an outlier even as strong headwinds globally. Investors continued keeping close eye on earning reactions. Some support also came with DIPAM Secretary Tuhin Kanta Pandey's statement that the focus of the government will be to improve the performance of CPSEs with a view to maximise wealth creation and not to push disinvestment just to meet targets. He said the market capitalisation of 77 listed public sector entities, which include banks, insurance companies and Central Public Sector Enterprises (CPSEs), has jumped 4 times in the last three years to about Rs 73 lakh crore.    

Markets experienced a significant rally as the day progressed and ended with strong gains, taking support from private report stating that the FMCG sector is expected to register 6.1 per cent volume growth in the rural market this fiscal. This volume growth in the rural market stood at 4.4 per cent a year ago, while the urban volume growth is likely to remain flat at 4.2 per cent. Sentiments remained upbeat, as the government eased certain norms for licence holders of the Export Promotion Capital Goods scheme as part of its ease of doing business efforts. The EPCG scheme facilitates import of capital goods for producing quality goods and services and enhances India's manufacturing competitiveness. It allows import of capital goods for pre-production, production and post-production at zero customs duty. 

On the global front, European markets were trading higher as strong U.S. GDP data and cooling inflation suggested a soft landing is in sight for the world's largest economy. Asian markets settled mixed on Friday as concerns about a slowdown in Chinese growth more than offset strong U.S. GDP data and signs of cooling inflation that continued to raise hopes the US Fed will cut interest rates as early as September.  

Back home, auto component industry stocks were in focus as the Automotive Component Manufacturers Association of India (ACMA) said the turnover of India’s automotive component industry registered a growth of 9.8 per cent in the financial year 2023-24. The turnover stood at Rs 6.14 lakh crore ($74.1 billion) during the year. Besides, stocks related to print media sector were in watch as a Crisil report stated that regional print media companies are expected to experience an 8-9% increase in revenue this fiscal year due to robust advertising revenue growth and a loyal subscriber base. 

Finally, the BSE Sensex rose 1292.92 points or 1.62% to 81,332.72, and the CNX Nifty was up by 428.75 points or 1.76% points to 24,834.85.

The BSE Sensex touched high and low of 81,427.18 and 80,013.60 respectively. There were 29 stocks advancing against 1 stock declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 2.12%, while Small cap index was up by 1.00%.

The top gaining sectoral indices on the BSE were Telecom up by 3.36%, Metal up by 3.19%, TECK up by 2.76%, Auto up by 2.35% and Basic Materials up by 2.26%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.51%, Adani Ports &SEZ up by 3.61%, Tata Steel up by 3.27%, JSW Steel up by 2.96% and Infosys up by 2.93%. On the flip side, Nestle down by 0.07% was the lone loser.

Meanwhile, the Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey has said that the focus of the government will be to improve the performance of Central Public Sector Enterprises (CPSEs) with a view to not to push disinvestment just to meet targets maximise wealth creation and. He said the market capitalisation of 77 listed public sector entities, which include banks, insurance companies and CPSEs, has jumped 4 times in the last three years to about Rs 73 lakh crore.

Pandey said there has been an improvement in the performance of public sector entities and markets have started valuing these entities in a much better manner. Also, LIC has contributed significantly to the total market capitalisation of CPSEs. According to the latest BSE data, LIC's market capitalisation stands at Rs 7.2 lakh crore.  There is a marked performance improvement, capex improvement, management incentives are getting aligned with the performance of CPSEs and markets are noticing it and therefore, there is a change in perception about CPSEs.

DIPAM Secretary said ‘disinvestment strategy is only supportive. It is subsumed into the asset management strategy, it is not a dominant strategy. If you have a dominant disinvestment strategy then it is a fiscal asset management strategy and not a public asset management strategy. We are seeing a shift towards value creation strategy and focus on creating wealth’. The government has also stopped giving any clear target for disinvestment receipts in the Budget document. It now provides the budget for capital receipts, which includes receipts from disinvestment and asset monetisation. In the current fiscal (FY25), the government has budgeted Rs 50,000 crore from capital receipts, up from Rs 30,000 crore in the last fiscal.

The CNX Nifty traded in a range of 24,861.15 and 24,410.90. There were 47 stocks advancing against 3 stocks declining on the index.

The top gainers on Nifty were Shriram Finance up by 9.52%, Cipla up by 5.76%, Divi's Lab up by 5.39%, Bharti Airtel up by 4.32% and Apollo Hospital up by 4.14%. On the flip side, ONGC down by 1.04%, Nestle down by 0.11% and HDFC Bank down by 0.02%. 

European markets were trading higher; UK’s FTSE 100 increased 58.48 points or 0.71% to 8,244.83, France’s CAC rose 67.19 points or 0.9% to 7,494.21 and Germany’s DAX gained 60.88 points or 0.33% to 18,359.60.

Asian markets settled mixed on Friday after data showed the US economy grew at an estimated 2.8% annual rate from April through June, double the rate from the prior quarter, while investors were awaiting the release of the PCE index and the Fed's policy meeting next week. Japanese shares declined, and the yen stabilized near a 12-week high against the US dollar ahead of next week's Bank of Japan policy meeting, where a 10-bps interest rate hike may be on the table. Taiwan shares tumbled as markets reopened from a two-day typhoon market closure.