Josh returns as markets light up on Diwali eve

Falling oil prices, higher GST collections and FII buying boost Sensex and rupee

Just ahead of Diwali, Indian benchmark indices clocked their best weekly gains in more than two years as global crude prices fell and the rupee strengthened. A strong trend in the Asian markets with the easing of concerns over the U.S.-China trade war and strong GST collections in October also acted as a catalyst for lifting investor sentiments.

The 30-share Sensex managed to close above the psychological 35,000-mark at 35,011.65, gaining 579.68 points or 1.68%. The gains were led by auto and financial constituents like Maruti Suzuki India, Tata Motors, HDFC, Hero Motocorp, Yes Bank and IndusInd Bank.

Auto stocks

Auto stocks got a fillip after crude prices cooled to $73 a barrel after touching four-year high levels of over $80 a barrel in the early part of October. The week saw Brent crude fall by about 6% to currently trade at seven-month lows. The broader Nifty closed the day at 10,553, up 172.55 points or 1.66%. Incidentally, both the benchmark indices gained almost 5% during the week, halting their two-week losing streak.

Further, foreign investors have started November on a positive note, buying shares worth Rs. 540 crore. This assumes significance as October ended worst-ever in terms of foreign outflows at nearly Rs. 29,000 crore.

“Positive news flow over rupee, crude and GST revenue collection lifted the sentiments on Friday,” said Abhimanyu Sofat, Head of Research, IIFL Securities.

“These factors have been negatively impacting the markets in the recent past, and, hence, with crude cooling off and rupee gaining strength, market sentiments got a boost. GST collections of Rs. 1 lakh crore in October also partly eased concerns related to fiscal deficit as we enter an election year,” Mr. Sofat added.

On Friday, the rupee clocked its biggest single-day gain in over five years, surging 101 paise to close at 72.44 against the dollar.

Incidentally, global financial major Morgan Stanley expects India's gross domestic product (GDP) growth to average around 7% over the next 10 years with investment, exports and consumption contributing to the growth. “We believe that India’s medium-term growth trend will be supported by the inter-play of the structurally-positive factors of demographics (strong growth in the working age population), reforms (including recent changes to tax laws and India's digitization drive that can help improve productivity) and globalisation (accelerating productive job opportunities, income and saving),” stated a report released on October 29.

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