Markets log strong gains on Friday

Indian equity benchmarks witnessed a major relief rally and ended with gains of over two and half percent on Friday, driven by value buying at lower levels and a rally in blue-chip bank stocks. Markets started the session on an optimistic note and experienced strong buying interest throughout the day as traders took encouragement with ICRA’s report stating that India’s economy is projected to grow at a faster pace in the third quarter of the current financial year (October-December 2024) compared to the first half of current financial year (April-September 2024). It stated that this optimism is based on improving economic indicators and robust activity levels in various sectors. Some support came with a private report that India is expected to remain relatively unaffected from the global financial disruptions that might occur due to a trade war between the US and China in 2025. The report stated that India’s structural growth prospects in the long run will remain strong despite ongoing global unpredictability.

Markets extended gains in late afternoon deals and settled near day’s high point, taking support from the latest HSBC ‘flash’ PMI survey compiled by S&P Global has showed that surging new business and export sales boosted output growth across India's private sector economy in the month of November. Rising capacity pressures, evidenced by increasing backlogs, prompted companies to ramp up hiring efforts, which was supported by an overall improvement in business activity expectations. Some solace also came with Union Commerce and Industry Minister Piyush Goyal’s statement that India is the best place in the world to provide sustainable infrastructure to the digital world. Minister pointed out that it will be important to understand how in the future the digital world and sustainability issues will intersect. Traders took a note of Reserve Bank of India’s (RBI) governor Shaktikanta Das’ statement that stable inflation acts as the foundation for sustained economic growth, boosts people’s purchasing power, and creates a stable environment for investment. 

On the global front, European markets were trading higher as some weak economic data raised expectations that the central banks will reduce interest rates further to boost growth. Asian markets ended mostly higher on Friday as market sentiment in Japan improved considerably after headline inflation slowed to a nine-month low. However, weak corporate earnings, worries about economic growth as well as concerns about the efficacy and sufficiency of stimulus measures contributed to a sell-off in mainland China and Hong Kong. 

Back home, on the sectoral front, the aviation industry stocks were in watch as Civil Aviation Secretary Vumlunmang Vualnam said Indian carriers, which currently have approximately 800 planes in their fleet, are projected to add about 600 planes in the next five years. There were some reaction in EV stocks as the Federation of Indian Chambers of Commerce and Industry (Ficci) urged the government to launch a second phase of the production-linked incentive (PLI) scheme (PLI 2.0), tailored to startups and smaller players in the electric vehicle (EV) sector. 

Finally, the BSE Sensex rose 1961.32 points or 2.54% to 79,117.11, and the CNX Nifty was up by 557.35 points or 2.39% to 23,907.25.   

The BSE Sensex touched high and low of 79,218.19 and 77,226.69 respectively. All the 30 stocks were advancing on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.26%, while Small cap index was up by 0.90%.

The top gaining sectoral indices on the BSE were TECK up by 3.18%, IT up by 3.14%, Realty up by 2.92%, PSU up by 2.63% and Capital Goods up by 2.36%, while there were no losing sectoral indices on the BSE. 

The top gainers on the Sensex were SBI up by 4.51%, TCS up by 4.13%, Titan Company up by 4.10%, Ultratech Cement up by 3.94% and ITC up by 3.92%, while there were no losers on the Sensex.

Meanwhile, the latest HSBC ‘flash’ PMI survey compiled by S&P Global has showed that surging new business and export sales boosted output growth across India's private sector economy in the month of November. Rising capacity pressures, evidenced by increasing backlogs, prompted companies to ramp up hiring efforts, which was supported by an overall improvement in business activity expectations. However, this strengthening of operating conditions came amid intensifying cost pressures and the steepest upturn in selling prices since February 2013.

The HSBC Flash India Composite Output Index -- a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors -- rose from a final reading of 59.1 in October to 59.5 in November, indicating a sharp rate of expansion that was the strongest in three months and above its long-run average. Growth ticked lower in the manufacturing industry whilst picking up in services, although the former outperformed again.

Cost pressures across India's private sector intensified in November, reaching their highest since August 2023. Manufacturers commented on price hikes for a range of raw materials, including aluminium, cotton, leather and rubber. Service providers particularly remarked on greater food costs (cooking oils, eggs, meat and vegetables) and wage bills. Although service providers noted a stronger increase in cost burdens than manufacturers, rates of charge inflation were broadly similar across the two sectors and both saw acceleration since October.

The CNX Nifty traded in a range of 23,956.10 and 23,359.00. There were 49 stocks advancing against 1 stock declining on the index.

The top gainers on Nifty were SBI up by 4.33%, Bajaj Finance up by 3.93%, Titan Company up by 3.89%, ITC up by 3.69% and TCS up by 3.66%. On the flip side, Bajaj Auto down by 0.39% was the lone loser.

European markets were trading higher; UK’s FTSE 100 increased 112.81 points or 1.37% to 8,262.08, France’s CAC rose 41.69 points or 0.57% to 7,255.01 and Germany’s DAX gained 176.42 points or 0.91% to 19,322.59.