Four Reasons Why Sensex Surged 600 Points Today

Indian share markets continued their momentum throughout the day and ended on a strong note.

Benchmark indices ended higher for the fourth straight session, tracking Asian peers which rose to two-week high after US President Donald Trump was discharged from hospital following treatment for Covid-19.

Gains were mainly led by index heavyweights HDFC and HDFC Bank. Shares of HDFC surged over 8% on improvement in business volumes in September quarter while HDFC Bank's shares rose after the lender reported 16% growth in advances and 20% rise in deposits for the second quarter ended September 30.

Sentiment also got a boost as India's service sector output broadly stabilized in September amid relaxations in the Covid-19 restrictions.

At the closing bell, the BSE Sensex stood higher by 601 points (up 1.5%).

The NSE Nifty closed higher by 159 points (up 1.4%).

HDFC and IndusInd Bank were among the top gainers today.

The SGX Nifty was trading at 11,667, up by 147 points, at the time of writing.

Both, the BSE Mid Cap index and the BSE Small Cap index ended up by 0.6%.

On the sectoral front, gains were largely seen in the realty sector and finance sector.

Asian stock markets ended higher today tracking gains in US markets amid hopes of fresh stimulus in the US. As of the most recent closing prices, the Hang Seng ended up by 0.9% and the Nikkei ended up by 0.5%.

US stock futures are trading marginally lower, indicating a negative opening for Wall Street indices. Nasdaq Futures are trading down by 44 points (down 0.4%), while Dow Futures are trading on a flat note.

The rupee is trading at 73.46 against the US$.

Gold prices are trading up by 0.3% at Rs 50,771 per 10 grams.

In news from the mutual funds space, mutual funds' asset base rose by 12% to Rs 27.6 lakh crore in the quarter ended September 30 mainly due to appreciation in the value of their existing holding in equity-oriented funds.

The average asset under management (AAUM) of the industry, comprising 45 players, was at Rs 24.6 lakh crore in April-June quarter, according to data by Association of Mutual Funds in India (Amfi).

All the top five fund houses, SBI MF, HDFC MF, ICICI Prudential MF, Aditya Birla Sunlife MF and Nippon India MF witnessed an increase in their respective average AUMs during the September quarter.

With an asset base of Rs 4,213.6 billion, SBI Mutual Fund continue to be the largest fund house during the September quarter 2020.

HDFC MF, which is at the second position, saw its asset base rising by 5.4% to Rs 3,755.2 billion during the period under review from Rs 3,561.8 billion in June quarter.

In June quarter, the industry had registered an 8% decline in AUM on account of outflow pressure both in debt and equity.

In other news, markets regulator on Monday tweaked product labelling norms for the Rs 27-trillion MF industry, introducing a new label called 'very high' risk.

The regulator also released a detailed framework for assigning labels to various mutual fund schemes. For equity schemes, the label will be dependent on various factors such as market cap, volatility and impact costs of the underlying stocks.

For debt schemes, the riskiness will have to be determined by factors such as credit risk, interest rate risk and liquidity risk.

The new framework will become effective from January 1, 2021.

We will keep you updated on the latest developments from this space. Stay tuned.

Speaking of mutual funds, note that last month on September 11, the capital markets regulator issued a circular directing multi-cap schemes to deploy at least 25% each in large-, mid-, and small-caps. At present, such schemes manage Rs 1.47 trillion in assets.

Assuming every fund rebalances, the circular is expected to trigger a move of around Rs 280 billion from largecaps to smallcaps.

Moving on to stock specific news...

Sobha was among the top buzzing stocks today.

Shares of the company surged as much as 14% on the BSE after the real estate major reported improved sequential sales in September quarter.

The company said that its sales volume, total sales value and share of sales value during Q2FY21 were up by 37%, 41% and 35%, respectively as compared to Q1FY21.

The company's dependency on the city in terms of sales volume also reduced from 74% during Q1FY21 to 60% during Q2FY21.

Sobha share price ended the day up by 9.6%.

Market participants were also tracking paint stocks today.

Paint stocks witnessed buying interest today, with Asian Paints and Berger Paints hitting their respective record highs on the BSE on expectation of healthy revenue recovery and operating margins.