Key gauges end at new peaks; Sensex breaches 84,000-mark

Indian equity benchmarks witnessed an excellent up-move on Friday, with Sensex closing above the historic 84,000-mark for first time while Nifty settling at a new record closing high, powered by a rally in Realty, Capital Goods and Auto stocks along with upbeat trends in the U.S. and Asian markets. Markets opened on a positive note and showed sustainable upside in the early to mid-part of the session, as traders took encouragement with a report by S&P Global stating that India is set to become the third largest economy and transition to the upper-middle-income category by 2030-31, driven by a projected annual growth rate of 6.7 per cent this fiscal. India posted GDP growth of 8.2 per cent in FY2024, exceeding the government’s earlier estimate of 7.3 per cent, sustained reforms are crucial for India’s economic momentum to continue. Some support also came with Economic Affairs Secretary Ajay Seth’s statement that the Fed rate cut would not have a significant impact on foreign inflows into India. 

Sentiments remained up-beat with Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi’s statement that India and South Korea have started sharing the bill of lading in an electronic transfer mode between the customs of both sides, a move that will help promote ease of doing business. Some optimism came with Petroleum Minister Hardeep Singh Puri’s statement that the United States is India's sixth largest energy trade partner and the growing bilateral trade has the potential to cross the $500 billion-mark from $200 billion at present. However, volatility struck the bourses in late afternoon deals as key gauges erased most of their gains to come off day’s highs, as traders turned cautious with exchange data showing that Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,547.53 crore on Thursday. But, in final minutes of trade, markets regained traction and ended at record high levels. 

On the global front, European markets were trading lower with investors assessing the likely impact of the monetary policy and interest-rate moves of major central banks on the economy. Asian markets settled mostly higher on Friday with investors continuing to cheer the Federal Reserve's half-a-percentage point interest rate cut on Wednesday, and digesting the policy moves of the Bank of Japan, the Chinese central bank. Back home, on the sectoral front, shipping sector stocks were in watch as the government announced a series of measures aimed at addressing shipping sector issues affecting exporters and importers. These include reducing certain charges at ports and purchasing five additional second-hand container vessels by Shipping Corporation of India (SCI). 

Finally, the BSE Sensex rose 1359.51 points or 1.63% to 84,544.31, and the CNX Nifty was up by 375.15 points or 1.48% to 25,790.95.     

The BSE Sensex touched high and low of 84,694.46 and 83,187.64 respectively. There were 26 stocks advancing against 4 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 1.16%, while Small cap index was up by 1.37%.

The top gaining sectoral indices on the BSE were Realty up by 3.21%, Capital Goods up by 2.32%, Auto up by 2.12%, Industrials up by 2.08% and Power up by 1.82%, while there were no losing sectoral indices on the BSE. 

The top gainers on the Sensex were Mahindra & Mahindra up by 5.57%, ICICI Bank up by 3.77%, JSW Steel up by 3.66%, Larsen & Toubro up by 3.07% and Bharti Airtel up by 2.84%. On the flip side, SBI down by 1.07%, Indusind Bank down by 0.33%, TCS down by 0.27% and Bajaj Finance down by 0.07% were the top losers.

Meanwhile, credit rating agency Crisil in its latest report has said that a fall in the prices of crude oil, which is one of India's top export items, is impacting oil exports, leading to a contraction in the country's overall exports in August. The report further highlighted that imports have surged faster than exports, contributing to a broader trade deficit.  According to the report, while the fiscal year commenced positively with merchandise exports growing steadily in the first quarter, growth slowed by July and August, resulting in a contraction. Factors like container shortages have disrupted major trade routes, exacerbating the decline.

The rating agency further said that in addition to these challenges, the US has announced plans to increase tariffs on Chinese goods, further affecting global trade flows. The report said that the situation involving US tariffs on Chinese goods is a key concern, as it is expected to have a broader impact. The slowdown in China's economy may also be leading to an increase in Chinese exports being dumped in the Asian market, including India.

For example, the report noted a significant rise in the import of steel from China and Vietnam in recent months, which could further widen India's merchandise trade deficit. Despite these challenges, the report pointed out that there are positive factors that could help offset the growing trade deficit. India's services trade continues to show a surplus, and the country is experiencing strong inflows of remittances from overseas workers. These factors offer some comfort and are expected to help maintain India's current account in a stable position, even as the merchandise trade deficit increases.

The CNX Nifty traded in a range of 25,849.25 and 25,426.60. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 5.32%, ICICI Bank up by 4.47%, JSW Steel up by 3.69%, Larsen & Toubro up by 2.97% and Coal India up by 2.84%. On the flip side, Grasim Industries down by 2.33%, SBI down by 0.69%, NTPC down by 0.22%, Indusind Bank down by 0.19% and Hero MotoCorp down by 0.10% were the top losers. 

European markets were trading lower; UK’s FTSE 100 decreased 29.86 points or 0.36% to 8,298.86, France’s CAC fell 46.54 points or 0.61% to 7,568.87 and Germany’s DAX lost 152.03 points or 0.8% to 18,850.35.

Asian markets settled mostly higher on Friday as investors were continuing to cheer the Federal Reserve’s Wednesday decision to lower interest rates by a half percentage point and digesting the policy moves of the Bank of Japan and the Chinese central bank. Japanese shares gained after the nation's key inflation data in August accelerated for a fourth consecutive month. The core consumer price index in Japan increased by 2.8% year-on-year in August, exceeding the central bank’s 2% target. As widely expected, the Bank of Japan maintained its key short-term interest rates steady at 0.25%. While the Japanese yen eased after Bank of Japan Governor Kazuo Ueda tempered expectations about another possible interest rate hike within the year. Chinese shares end flat as China refrained from further monetary stimulus as the central bank left its main benchmark lending rates unchanged.