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Markets close at fresh highs after trade deficit narrows

16:47

The News International Team

Indian shares surged in late trade following the release of robust trade deficit numbers, which reiterated the view that India’s dangerous tryst last year with high external deficits is behind, and, corroborated by recent macro data, that an economic recovery should be under way.

At close, the Sensex jumped 0.47 percent, or 131 points, to 28,177 points while the 50-share Nifty gained 0.49 percent, or 41 points, to 8,430.

Earlier, stocks traded with a marginal negative bias, tracking Asian peers, after a surprise quarterly contraction in Japan’s GDP – the second in a row – plunged it into a recession.

But in afternoon trade, India’s October trade deficit data narrowed to USD 13.36 billion (from 14.25 billion month-on-month) led by a decline in oil imports.

The fall in overall imports was also accompanied by a less-than-proportionate fall in exports, which hit a seven-month low, but experts CNBC-TV18 spoke to said a low base effect would kick in from January onward, and push exports into the positive zone.

Broad-based move

Barring so-called defensive sectors IT and pharmaceuticals, the up-move was broad-based, with metals, oil & gas, capital goods, banks, cement and telecom all rising more than 2 percent on average.

Key movers in the frontline indices were SBI and Tata Motors, up 5.4 percent and 4.1 percent, respectively, following their earnings declaration Friday.

SBI’s move had a positive rub-off on other public sector banks, with Bank of Baroda (4.2 percent) and Punjab National Bank (2.74 percent) rising too.

The results season, which ended Friday, impacted many stocks in trade today but even a broad consensus that revenue growth was dismal was not enough to deter stocks from making fresh highs.

“We started of with the macro repair in a sense with the top-down beginning to trough out and starting to get better and with a lag,” Anup Maheshwari of DSP BlackRock told CNBC-TV18 in an interview .

“We are hoping that corporate earnings will also start picking up. It is not fully evidenced at the moment yet has we have seen from this quarter as well. However the general assumption and the same assumption that we are working with is that we will start seeing this come through in financial year 2016,” he added.

Mid- and small-cap stocks outperformed their larger cap peers, with a 0.9 percent and 1.1 percent move overall.

Within mid and small caps, several stocks hit upper circuit filters: Patel Integrated Logistics, Hind Rectifiers, Phillips Carbon, Hindustan Media Ventures and Cantabil Retail, among others, were all locked with a 20 percent gain.

Shares of logistics firms continued their robust run, with Snowman Logistics and Allcargo vaulting 15.3 percent and 13.5 percent, respectively.

Over the past one year, logistics shares such as Allcargo, Transport Corp and Patel Integrated have gained between 250 percent and 750 percent, as hopes increased economic activity and a surge in ecommerce would lead to more business for logistics firms.

Other asset classes

In other asset classes, gold slipped lower, falling 0.67 percent to Rs 26,650, a day after it clocking its single biggest gain.

The rupee strengthened marginally against the US dollar while the yield on the benchmark 10-year bond fell 8.18 percent after Goldman Sachs said it expects the Reserve Bank of India to cut rates by 50 basis points by next June, thanks to the recent fall in inflation.

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