Sensex gains 288 points as inflation remains flat and global cues are strong

Equities ended the day in the green on Tuesday with the benchmark Sensex gaining 287.72 points or 0.74% to close at 39,044.35 whereas, the Nifty gained 81.75 points or 0.71% to close at 11,521.8. The markets were up on favourable inflation data and positive global cues.

The markets traded in the green throughout the trading session, clocking most of its gains during the last hour of trade. On the domestic front, the Consumer Price Index (CPI) inflation remained flat in August at 6.69%. The markets reacted positively to the CPI numbers that came out late last evening. Additionally, strong global cues also helped the markets remain buoyant and contributed to their gains. The Chinese retail sales grew for the first time in the year whereas, the industrial output accelerated the most in eight months. Deepak Jasani, head-retail research, HDFC Securities, said, “Encouraging Chinese retail sales and industrial production data, hopes on vaccine and flurry of corporate deals pushed indices higher. Banks and pharma indices rose while realty index was down. Smallcap and midcap indices rose more than the Nifty.”

Asian markets in Hong Kong, Taiwan, China, and South Korea were up between 0.38% and 0.65%. On the other hand, European markets in Germany, France, and the United Kingdom were up between 0.31% and 1.04% at the time of press. In its previous trading session, the US markets had also witnessed gains with benchmarks like Dow Jones, S&P 500, and Nasdaq rallying between 1.18% to 1.87%. At the time of press, Dow Jones Mini Futures were also up by 203 points.

The small and midcap stocks outperformed the benchmarks for the second straight session after the re-allocation norms from the Securities and Exchange Board of India (Sebi) were announced on September 11. Nifty Midcap 100 and Nifty Smallcap 100 were up by 1.09% and 1.53%. In its report, Jefferies said, “As of August 2020, the average net assets under management (AUM) of Multi-Cap funds stands at Rs 1,467 billion. As per Jefferies estimates, approximate average allocation split between large, mid and small cap companies is now at close to 75%, 17% and 6% . If these rebalancing guidelines (min 25% each) get implemented, mid and small cap categories could witness an incremental allocation to the tune of close to Rs 115 billion or close to Rs 275 billion, respectively. This could be a sizeable opportunity — the current AUM of mid and smallcap funds stands at Rs 881 billion and `509 billion (as of August 2020).”

The futures and options segment saw a turnover worth Rs 15.8 lakh crore against the six month average of Rs 15.43 lakh crore. The cash market saw a turnover worth Rs 53,882.92 crore against the six-month average of Rs 53,128 crore. The foreign portfolio investors in September so far have been marginal sellers, pulling out $179.28 million in total. On Monday, FPIs bought stocks worth $39.23 million whereas, domestic institutional investors sold stocks worth $15.83 million.

The biggest gainers on Nifty were IndusInd Bank, Cipla, UPL, Axis Bank, and Bharti Airtel which were up by 4.68%, 2.8%, 2.75%, 2.34%, and 2.31%. The biggest losers on Nifty were Titan, Maruti Suzuki, HDFC Life, Eicher Motors, and ITC down by 1.35%, 1.11%, 0.91%, 0.85%, and 0.82%, respectively.