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Stocks rally for third day on tax cut hopes

The Sensex climbed 582 points to end at 39,831.84, its highest close since July 2.

ET Bureau|
Updated: Oct 30, 2019, 09.31 AM IST
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Tata Steel and JSW Steel rallied 7 per cent while SAIL and Jindal Steel gained 5 per cent each.
Mumbai: Stocks surged for the third straight day and closed at near-four-month highs as better than expected earnings and hopes of tax sops for equity investors lifted sentiment.

Higher retail and car sales during the long Diwali weekend and the festival month of October also added to the buoyant mood with investors expecting more government measures to propel the economy out of its year-long slump.

The Sensex climbed 582 points to end at 39,831.84, its highest close since July 2. The Nifty rose 160 points to close at 11,786.85. All indices ended in the green except telecom, which fell 4 per cent. The BSE MidCap and SmallCap indices rose 1.12 per cent and 0.55 per cent, respectively.

The Sensex and the Nifty have risen 10.43 per cent and 8.51 per cent, respectively year-to-date.

Markets were buoyed by reports that the government may consider rationalising the taxes that equity investors pay, including the long-term capital gains tax announced in last year’s budget.

The finance ministry and the prime minister’s office are holding consultations on cutting some rates and doing away completely with the securities transaction tax, some media reports said.

Foreign portfolio investors bought shares worth ?877 crore on Tuesday while domestic institutions pumped in ?145 crore in equities.


Good show by heavyweights

Heavyweights like ICICI Bank, SBI and Tata Motors posted better than expected second quarter earnings over the weekend leading many investors to believe that the worst may be over for auto and banking stocks. Tata Motors surged 17 per cent on Tuesday capping 30 per cent rise in just two days. SBI fell on Tuesday but the shares had risen 7 per cent on Friday after posting a three-fold rise in second quarter profits. Reliance Industries surged 2.3 per cent to Rs 1,467, contributing most to the Sensex’s gain, after it announced plans to make its telecom subsidiary net-debt free and the setting up of a new company to house all digital initiatives and apps. Metal stocks were also big gainers. Tata Steel and JSW Steel rallied 7 per cent while SAIL and Jindal Steel gained 5 per cent each.
sensex-graph

“A sharp turn in sentiment can lift all the boats and offer good trading opportunities in the beaten down stocks,” Gaurav Dua, head of capital market strategy & investments at Sharekhan, said referring to the improved mood after the Diwali sales and earnings reports.

Technical analysts said the Nifty has formed a bullish candle on a daily scale as follow-up buying happened at higher levels. “Supports are gradually shifting higher,” said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services. Sandeep Nayak, CEO of Centrum Broking, believes that the recently concluded festival season has resulted in a sentiment turnaround for beleaguered auto stocks. Auto sales rose 5-7 per cent in this year’s festival season — spread over Navratri, Dussehra and Dhanteras — over the year-ago period. Two car makers, Maruti Suzuki and Hyundai, have registered 7 per cent and 10 per cent growth, respectively, ET reported in its Monday edition. Two-wheeler sales haven’t seen as much of a festive surge, though the performance has improved over previous months.

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