Key indices extended gains and hit fresh intraday high in mid-morning trade as assembly elections results in Gujarat and Himachal Pradesh showed that BJP will return to power for a sixth straight term in Gujarat and will overthrow Congress rule to form government in Himachal Pradesh. At 11:20 IST, the barometer index, the S&P BSE Sensex, rose 207.77 points or 0.62% at 33,670.74. The Nifty 50 index gained 69.85 points or 0.68% at 10,403.10. The Sensex was trading above the psychological 33,000 mark after having skidded below that mark in early trade.
The Sensex gained 299.07 points or 0.89% at the day's high of 33,762.04 in mid-morning trade, its highest level since 28 November 2017. The index slumped 867.34 points or 2.59% at the day's low of 32,595.63 in early trade, its lowest level since 6 December 2017. The Nifty gained 95.85 points or 0.93% at the day's high of 10,429.10 in mid-morning trade, its highest level since 7 November 2017. The index skidded 258.45 points or 2.5% at the day's low of 10,074.80 in early trade, its lowest level since 7 December 2017.
The BJP has been ruling in Prime Minister Narendra Modi's home town Gujarat for the last two decades and a win today will boost its chances to form government once again at the Centre in the 2019 general elections. The win will also help BJP to continue with its bold reforms and fulfilling mandate for economic development.
Indices slumped in early trade after early trends of Gujarat assembly election results showed a close fight between incumbent BJP party and rival Congress party. Market soon reversed losses in morning trade as concerns eased following BJP crossing past simple majority mark in its stronghold Gujarat state. Market extended gains in mid-morning trade as BJP win was confirmed in both the states.
The S&P BSE Mid-Cap index rose 0.78%. The S&P BSE Small-Cap index gained 0.69%. Both these indices outperformed the Sensex.
The breadth, indicating the overall health of the market, was very strong. On the BSE, 1,541 shares rose and 829 shares fell. A total of 115 shares were unchanged.
Auto stocks gained. Mahindra & Mahindra (M&M) (up 3.4%), Ashok Leyland (up 1.64%), Maruti Suzuki India (up 1.36%), Tata Motors (up 0.85%), Eicher Motors (up 1.13%), Bajaj Auto (up 0.21%), Hero MotoCorp (up 0.51%), and TVS Motor Company (up 0.5%) gained.
Cement stocks dropped. ACC (down 0.62%), Shree Cement (down 0.83%) and UltraTech Cement (down 0.51%) declined. Ambuja Cements rose 0.13%.
Grasim Industries declined 0.89%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
ICICI Bank gained 1.19% after ICICI Bank's subsidiary company, ICICI Securities has filed a draft red herring prospectus with Securities and Exchange Board of India (Sebi) for a public offer of up to 6.44 crore equity shares of face value of Rs 5 each of ICICI Securities, representing approximately 20% of its equity share capital as on date, for cash through an offer for sale (OFS) of up to 6.44 crore equity shares by ICICI Bank.
The offer includes a proposed reservation of up to 32.21 lakh equity shares (up to 5% of the offer) for individual and Hindu Undivided Family (HUF) shareholders of ICICI Bank. The announcement was made after market hours on Friday, 15 December 2017.
Separately, Morgan Stanley France SAS sold 80 lakh shares of ICICI Bank to Societe Generale at Rs 306.75 apiece in a block deal on the BSE on Friday, 15 December 2017.
Shalimar Paints rose 1.19% to Rs 203.35 after the company said that its board of directors, at a meeting held on Friday, 15 December 2017, approved the proposed rights issue of equity shares of the company. The rights issue price is Rs 140 per share and the maximum issue size is Rs 50 crore. The rights entitlement ratio is fixed at 6:32. The record date for rights issue is 29 December 2017. The announcement was made after market hours on Friday, 15 December 2017.
Shares of Future Supply Chain Solutions were trading at Rs 680.30 on BSE, a premium of 2.45% over the initial public offer price of Rs 664. Future Supply Chain Solutions (FSC) is one of the largest third-party logistics service providers in India.
On the political front, counting of votes is underway for recently held assembly elections in Gujarat and Himachal Pradesh with trends showing that BJP could still be able to form the government in both the states after early trends had showed a close fight with the rival Congress party. BJP was leading or won in 101 seats while Congress was leading or won in 73 seats out of total 181 seats in Gujarat. BJP was leading or won in 40 seats while Congress was leading or won in 22 seats out of total 68 seats in Himachal Pradesh.
Poll in Himachal Pradesh took place in single phase on 9 November 2017, while in Gujarat, poll was scheduled in two phases on 9 and 14 December 2017.
On macroeconomic data front, India's merchandise exports surged 30.5% to $26.2 billion in November 2017 over a year ago. Meanwhile, merchandise imports increased 19.6% to $40.02 billion. The trade deficit rose 3.2% to $13.83 billion in November 2017 from US$ 13.01 billion in November 2016.
India's services exports improved 7.9% to $14.15 billion in October 2017 over October 2016. Meanwhile, India's services imports galloped 13.3% to $8.70 billion in October 2017. India's services trade surplus rose 0.3% to $5.45 billion in October 2017 from $5.43 billion in October 2016.
Overseas, Asian stocks were mixed. Japan's export growth accelerated in November to mark a full year of annual gains. The 16.2% export growth in November, accelerated from a 14% year-on-year increase in the previous month, according to the Ministry of Finance.
China's central bank raised interest rates on reverse repurchase agreements, or reverse repos, used for open market operations by 5 basis points for the 14-day tenor on Monday, following upward adjustments on other tenors last week.
US stocks rose to all-time highs on Friday, 15 December 2017, as expectations of a Republican tax bill passing increased. The plan will likely cut the corporate tax rate to 21% from 35%.
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