Closing bell: Investor wealth continued to soar for the second consecutive day on Monday, rising by Rs 10.50 lakh crore so far, as market sentiment remained euphoric after a host of measures were announced to boost slowing economic growth.

The broader NSE index ended up 2.92 per cent at 11,603.40, on Monday, while the benchmark BSE index rose 2.83 per cent at 39,090.03.

Both the indices recorded their best day in more than a decade after Finance Minister Nirmala Sitharaman on Friday cut the effective corporate tax rate to around 25 per cent from 30 per cent and scrapped the minimum alternative tax for domestic companies.

Almost all the sectoral indices extended Friday's rally by moving sharply higher baring IT and pharma sector.

The Sensex hit an intraday high of 39,441.12 and a low of 38,674.04. Similarly, the Nifty touched an intraday high of 11,694.85 and a low of 11,471.35. The market breadth was positive as 1,643 shares advanced, against a decline of 968 shares, while 183 shares were unchanged.

Financials were among the top gainers, with the Nifty banking index, which tracks both state-owned and private-sector lenders, rising up to 5.41 per cent.

The Nifty fast-moving consumer goods (FMCG) index, which jumped up to 4.41 per cent, marked its best session in more than eight years. Sector heavyweights Colgate Palmolive and United Breweries rose 8.14 per cent and 8.13 per cent respectively.

The Nifty auto index rose 2.99 per cent as investors welcomed the stimulus boost to an ailing industry, which has seen massive inventory pile-ups and job cuts.

IT stocks, however, ended in the red with Oracle Financials falling as much as 5.16 per cent, while Infosys Ltd was down 4.97 per cent.

Jumping the gun 

Even as India Inc is still evaluating how it will deploy the Finance Minister’s tax bonanza, the analyst community appears quite gung-ho that these cuts will flow straight through to corporate bottom-lines, paving the way for the next leg of the bull run.

Weighing in with instant analysis on the tax cuts in the last couple of days, leading brokerages have put out brand-new profit growth estimates for the Nifty50 that now expect earnings for these leading lights of India Inc to vault by 25 per cent in the current fiscal, in place of the previously projected 15-16 per cent. Read the Quick Edit here

Investor wealth zooms Rs 10.50 lakh crore in two days of market rally

Investor wealth continued to soar for the second consecutive day on Monday, rising by Rs 10.50 lakh crore so far, as market sentiment remained euphoric after a host of measures were announced to boost slowing economic growth.

The 30-share BSE Sensex soared 1,331.39 points to a day’s high of 39,346.01. On Friday, it had logged its biggest single-day gain in over a decade by surging 1,921.15 points or 5.32 per cent to 38,014.62.

Led by the continuous strength in the equity market, the market capitalisation (m-cap) of BSE-listed firms jumped Rs 10,53,495.23 crore to Rs 1,49,05,246.57 crore so far in two days.

The m-cap of BSE-listed companies was Rs 1,38,54,439.41 crore on Thursday.

Markets are on a rise since Finance Minister Nirmala Sitharaman delivered a surprise cut in corporate tax rates.

Broker's call: PI Industries (Buy)

We increase PI Industries’ target price to ₹1,450 from ₹1,305 and turn overweight in sector EAP from marginal UW, factoring in faster execution of Custom Synthesis & Manufacturing (CSM) order book in the wake of Isagro (Asia) Agrochemicals Pvt Ltd (IAPL) acquisition.

We also raise our FY21E revenue/EBITDA/PAT by 6 per cent/16 per cent/11 per cent as we take into account the ramp-up of IAPL’s under-utilised capacity. PI Industries had earlier guided for double-digit revenue growth, driven by growth in its CSM business. Read more here

OTS may sweeten Sakthi Sugars stock

Sakthi Sugars has entered into a deal with Bank of India for a one-time settlement (OTS). Accordingly, against the outstanding amount of ₹233.78 crore as at March 31, 2019, the company has settled to pay ₹150.43 crore on or before March 30, 2020 as OTS.

The down payment of ₹15.04 crore (10 per cent) has been adjusted against the payment already made by the company. The company will be charged simple interest at 10.45 per cent from July 17 on reducing balance basis.

Trading call: Escorts can move higher if momentum sustains (₹ 622)

The stock price of Escorts is on the rise, and it is currently trading at 4-month high gaining nearly 10 per cent in today’s session. Since Friday the stock is up by 20 per cent and is currently trading at ₹620 levels.

Friday’s closing price confirms that the stock went past 100-day moving average denoting a potential reversal in the long-term trend. The Relative Strength Index is nearing the over-bought levels, but it seems to have some more room left on the upside. The MACD indicator is pointing upwards, suggesting a strong uptrend. However, the stock faces resistance at ₹630 levels in the form of 50 per cent Fibonacci retracement level of the previous downswing.

Hence, if the bullish momentum sustains and help the stock breach ₹630, it has ample space left on the upside with potential targets for the medium term at ₹672 levels – 61.8 per cent Fibonacci retracement level – and ₹700.

Reliance Cap’s stake sale in mutual fund arm to be completed by month-end

Reliance Capital’s deal to sell its entire stake in mutual fund arm to joint venture partner Japan’s Nippon Life Insurance will be completed by the end of this month, RNAM CEO Sundeep Sikka said on Monday.

Post stake-sale, Nippon Life Insurance will own 75 per cent stake in Reliance Nippon Life Asset Management (RNAM) for the long term, and the rest will be owned by public, including few marquee investors, Sikka said at the company’s annual general meeting.

Nifty call: Buy in dips with stop loss below 11,590

Following Friday’s strong rally, the Nifty 50 index opened with a huge gap up in today’s session and continued to head north. The index is currently trading up by 3.4 per cent. Similarly, the Sensex too began the day with a gap up and continued to rise.

Market breadth is favouring the bulls as the Advance-Decline ratio is at 35-15. India VIX – the volatility index is at 16.7 levels, up by 9 per cent. All the sectoral indices are in the green except Nifty IT index and Nifty Pharma index, which are down by 2.8 and 1.6 per cent respectively. Top gainer is Nifty FMCG index which is up by 6 per cent followed by Nifty Private bank index and Nifty Fin service index, both gaining a little over 5 per cent. Read more on the technicals here

Zydus Cadila gets EIR from USFDA for Ankleshwar facility

Drug firm Zydus Cadila on Monday said it has received an Establishment Inspection Report from the US health regulator for its manufacturing facility located at Ankleshwar in Gujarat.

The company’s active pharmaceutical ingredient (API) manufacturing facility located at Ankleshwar (unit 1), Gujarat has received an Establishment Inspection Report (EIR), Zydus Cadila said in a regulatory filing.

Media, entertainment companies to benefit from corporate tax cuts

Media and entertainment sector would benefit greatly from the corporate tax rate cut. The effective tax rate for most of the companies in this sector is higher than the 25.17 per cent rate (including surcharge and cess) that has been announced. Here are the key players to benefit

Airtel, Bharti AXA Life tie up to offer pre-paid plan with term cover

Bharti Airtel has tied up with Bharti AXA Life Insurance to offer pre-paid plan with insurance protection cover for its customers, as part of its strategy to leverage the deep penetration of mobile services to build a financially secure India.

Airtel has come up with an innovative ₹599 pre-paid bundle with 2GB data/day, unlimited calls to any network and 100 SMS/day, and also offers ₹4 lakh life insurance cover from Bharti AXA Life Insurance. The recharge comes with a validity of 84 days, and the insurance cover continues automatically for three months with every recharge. Read more here

Lupin gets 3 observations from USFDA for its Tarapur facility

Pharma major Lupin on Monday said the US health regulator has issued three observations after inspection of its Tarapur facility in Maharashtra.

The inspection of Tarapur facility was carried out by the United States Food and Drug administration (USFDA) between September 16-20, 2019.

“The inspection at the Tarapur facility closed with three observations,” Lupin said in a regulatory filing.

NSE IT index down; Oracle Financial Service falls 4.17%

The Nifty IT index was trading 2.45 per cent down at 15,111.15 points around 11.20 am.

Earlier, BusinessLine had reported in its sectoral update that IT and software companies that build their intellectual property get a weighted deduction under the income-tax laws on the R&D expenses that they have incurred to develop their IP.

Also, many companies have an effective corporate tax rate below 25.17 per cent (including surcharge and cess), and they get the benefit of profit-based deductions for exporting their services from special economic zones in India.

Shares of Oracle Financial (down 4.17 per cent), Infosys (down 3.70 per cent), TCS (down 2.66 per cent), TechMahindra (down 2.33 per cent) and Wipro (down 1.85 per cent) were trading sharply lower.

Mindtree (up 0.85 per cent) and NIIT Tech (0.22 per cent) are the exceptions to trade in positive territory.

Why Thomas Cook (India) is not affected by British tour operator's collapse

While the 178-year-old British tour operator Thomas Cook collapsed on Sunday night, Thomas Cook (India) Group has not been impacted.

Read more:Thomas Cook collapse: Bailout fails, tourists stranded

Thomas Cook (India) Group is an entirely different entity since August 2012 when it was acquired by Fairfax Financial Holdings (Fairfax), a Canada based multinational investment company.

Post the transfer of its entire stake in Thomas Cook (India) Limited to Fairfax, Thomas Cook UK ceased to be the promoter of Thomas Cook (India) Limited and since then, Thomas Cook UK has had no stake in Thomas Cook (India) Limited.

"The last seven years have been fruitful as we continue to grow and build our legacy as an independent entity after Fairfax Financial Holdings acquired a 77 per cent stake in Thomas Cook India Ltd. (TCIL) in 2012," Thomas Cook India said in a statement.

At 10.45 am, the stocks of Thomas Cook India Ltd were trading 4.15 per cent lower at Rs 150. Read more here

FMCG shares trade higher in the morning session

Shares of Britannia (up 8 per cent), United Breweries (rises 7.45 per cent), ITC (up 7.04 per cent), Jubilant Foodworks (up 6.34 per cent), Hindustan Unilever (up 6.07 per cent) and Colgate Palmolive (up 5.48 per cent) were the top gainers in the FMCG index.

According to BusinessLine's sectoral influence on Corporate tax cut impact, the FMCG segment is likely to be a beneficiary of the new 25.17 per cent tax rate.

The Nifty FMCG index was trading 5.45 per cent higher at 31,402.45 around 11 am.

Bank shares advance; IndusInd Bank rises 5%

Bank shares were leading the gain in Monday's morning session.

Shares of IndusInd Bank (up 5.45 per cent), ICICI Bank (up 4.86 per cent), HDFC Bank (up 4.53 per cent) and RBL Bank (up 4.53 per cent) were the top performers in the index.

Kotak Bank (up 3.70 per cent), Axis Bank (up 3.48 per cent), SBI (up 0.88 per cent) and IDFC First (up 0.23 per cent) too were trading in green.

The Nifty Bank index was trading 3.67 per cent up at 30,045 around 10.46 am.

Rupee slips 9 paise to 71.03 against USD

The rupee opened marginally lower by 9 paise to 71.03 against the US dollar in opening trade on Monday, as rising crude oil prices and concerns regarding US-China trade war kept investors edgy.

Forex traders said reports that the US is likely to ramp up pressure on China by raising existing tariffs if a trade deal is not reached soon between the two countries, weighed on the domestic currency.

Performance of Bank stocks at 10.35 am

Broker's call: Mastek (Buy)

Mastek is an IT services provider with revenue of $148mn in FY19 and a headcount of 2,035 employees. The company predominantly focuses on the UK Geography (about 71 per cent of revenues).

Within verticals, it has strong competency in government/ retail/ financial services, which account for 40 per cent/38 per cent/16.5 per cent of revenues respectively. Read more on the buy call here

Hold on to NMDC

The stock of NMDC, the country’s largest iron ore producer, has fallen by about 7 per cent from our last ‘buy’ call in mid-December 2018.

The fall has been in tandem with the sell-off across the metal and mining space, in the wake of trade tensions between the US and China. Read more on to stock fundamentals

Paint stocks may continue to shine, despite crude shocks

The stock prices of paint companies have been on a roll, in an otherwise volatile market. The softening crude prices (until recently) and the companies’ strong June quarter performance have found favour with investors.

With crude prices doing a sudden  volte-face  and spiking over the past week, following drone attacks on Saudi Arabia’s largest oil producing company — Saudi Aramco — the stocks could see some near-term correction. Click here to read the sectoral insight here

Altico Capital holds meetings with creditors for resolution

Altico Capital, which is reeling under a liquidity crisis and a weak real estate market, on Sunday said it has held a series of meetings with its creditors to find a resolution that will allow it to meet its financial commitments.

The liquidity situation of the non-banking finance company was exacerbated by, among others, prepayments of loans to a couple of lenders due to high interest rate reset/ exercise of put option, setting off of unutilised external commercial borrowing funds by a leading private sector bank against its outstanding, and loan-recall notices. Read more here

Corporate tax cut: No immediate impact seen for IT companies

Most companies in the information technology space will not be enthused by the corporate tax rate cuts announced by Finance Minister Nirmala Sitharaman.

There are two reasons. Many companies have an effective corporate tax rate below 25.17 per cent (including surcharge and cess) and they get the benefit of profit-based deductions for exporting their services from special economic zones in India. Read the insights here

Markets Update: Extending its euphoria over government’s economy-boosting measures, equity benchmark BSE Sensex soared over 1,300 points to reclaim the 39,000-mark in early session on Monday, driven by gains in index heavyweights HDFC Bank, ITC, L&T and ICICI Bank.

After hitting a high of 39,346.01 points, the 30-share index was trading 675 points, or 1.78 per cent, higher at 38,690.54 at 10 a.m., while the broader Nifty rallied 208.30 points or 1.85 per cent, to 11,482.50.

In the previous session on Friday, the BSE barometer logged its most significant single-day jump in over a decade by surging 1,921.15 points or 5.32 per cent to 38,014.62, while the NSE Nifty zoomed 569.40 points or 5.32 per cent to end at 11,274.20.

Bulls took over Dalal Street after Finance Minister Nirmala Sitharaman delivered a surprise cut in corporate tax rates.

Announcing the latest set of measures to jump-start flagging growth, the Finance Minister slashed the base corporate tax for existing companies to 22 per cent from 30 per cent; and for new manufacturing firms, incorporated after October 1, 2019, to 15 per cent from 25 per cent.

The market continued to rally on Monday as sentiment investor remained euphoric in the opening session, traders said.

Cement, Infra, Capital Goods: Building a strong base

For infrastructure companies, the effective tax rates in FY19, after taking into account all eligible exemptions and tax holidays, work out to 27-35 per cent of their standalone PBT.

For companies such as Engineers India, Ircon International, Ashoka Buildcon and RITES, availing themselves of the lower tax rate of 25.17 per cent could translate to a 14-18 per cent jump in earnings, going forward. Whereas, giants such as Larsen & Toubro and IRB Infra developers could witness only a 2 and 5 per cent rise in PAT led by tax savings. Click here to read more

Corporate tax cut: Lower tax for `auto' majors

Going by the 2018-19 numbers, Hero MotoCorp, TVS Motors and Maruti Suzuki and Eicher Motors have an effective tax rate of 29-33 per cent and could benefit from the reduced rates. However, the rates of Mahindra & Mahindra and Ashok Leyland, are much lower. Read more here

Corporate tax cut: Impact on FMCG stocks

With major players such as Hindustan Unilever, Nestle, Britannia, GSK Consumer and Colgate-Palmolive suffering an effective tax of 32-36 per cent, the FMCG segment could be a beneficiary of the new 25.17 per cent tax rate.

At the same time, home-grown companies such as Dabur, Jyothy Labs, Godrej Consumer, Bajaj Consumer and Marico may not choose to move to the new regime, considering that their effective tax rates are either on a par with or lower than 25.17 per cent. Read more on the insight

Oil gains on Saudi supply disruption, Mideast tensions

Oil prices rose to their highest in two sessions on Monday amid concerns about oil supply disruptions from Saudi Arabia and elevated tensions in Middle East.

Brent crude futures LCOc1 increased to as much as $65.50 a barrel. The front-month contract was at $64.84, up 57 cents, or 0.9%.

Despite efforts by the world’s top oil exporter Saudi Arabia to reassure global markets that it can resume full production by the end of this month after an attack on its largest oil processing facility in mid-September, buyers and traders remained skeptical.

Asian markets dip on geopolitical tensions, oil up 1%

Most Asian share markets slipped on Monday as investors waited for more clarity on the Sino-U.S. trade talks after recent negotiations, while oil gained more than 1% as Middle East tensions remained elevated.

Analysts said investor sentiment was fragile with civil unrest in Hong Kong, tensions in the Middle East and worries over whether the United States and China would sign a trade deal soon. Moves were further exaggerated by low volumes as Japanese markets were shut for a public holiday.

No plans to revise fiscal deficit target or cut spending now, says FM

India will not revise its fiscal deficit target immediately and is not planning any spending cuts at this stage, the finance minister Nirmala Sitharaman said on Sunday, after slashing corporate tax rates to boost a flagging economy. - Reuters

Sectoral indices at 9.25 am

Opening bell: The Friday’s fireworks in equity markets, which saw the Sensex and Nifty rise by 5.32 per cent in a single trading session, continued in Monday's opening trade too.

The 30-share BSE index Sensex opened 1,197.34 points higher at 39,211.96 against the previous close of 38,014.62. The 50-share NSE index Nifty was trading 315 points higher at 11,589.20 against the previous close of 11,274.20.

Fireworks in equity markets likely to continue

Friday’s fireworks in equity markets, which saw the Sensex and Nifty rise by 5.32 per cent in a single trading session, are likely to continue in the coming week, too.

Data shows that foreign portfolio investors (FPIs) still hold around 64,000 contracts of net short positions in the futures segment on the National Stock Exchange (NSE). The same was around 1.2 lakh contracts last week. A huge amount of short positions simply mean that markets could rally as funds cover their positions. FPIs could step on the gas pedal to cover their short positions on account of monthly derivative expiry on Thursday. Read more here

The Sensex and Nifty can extend their rally

The Sensex and the Nifty commenced the past week on a weak note and continued to decline. But the indices did a volte-face and zoomed more than 5 per cent on Friday, triggered by the Finance Minister’s announcement of a sharp cut in corporate tax rate and the roll-back of the increase in surcharge on capital gains from the sale of listed shares.

The Nifty Auto and the Nifty Bank indices were the top gainers on Friday’s session, rallying 9.9 per cent and 8.3 per cent, respectively. Investor focus will now shift to the upcoming RBI policy meeting scheduled for early October. Read more on the Index Outlook here

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