Late hour buying helps markets to keep their head above water

Buying activity which took place during last leg of trade mainly drove the markets higher and key domestic benchmarks managed to keep their head above water on Thursday. Markets traded choppy throughout the session as investors remained cautious ahead of the winter session of parliament which begins next week and RBI’s policy review due on December 2, 2014. But, markets staged a smart recovery in dying hour of trade supported by short-covering in beaten down but fundamentally strong stocks.

Also, sentiments improved on reports that foreign institutional investors stood net buyers in Indian equities worth Rs 71.80 crore on November 19, 2014, as per provisional stock exchange data. Meanwhile, the Securities and Exchange Board of India (SEBI) has cleared big-bang market reforms, including a move to replace the two-decade-old insider-trading rules with the new prohibition of insider trading (PIT) regulations, and amending the existing delisting regulations. Further, the coal ministry has issued draft guidelines for reallocation of coal mines cancelled by the Supreme Court, marking the duties of the authorities appointed to operate the ordinance issued.

Global cues remained subdued with European markets making an awful start as the private sector in its biggest economy, Germany, grew at the slowest rate in 16 months, and in France a slight pick-up was overshadowed by the fastest drop in new business in over a year. Asian markets ended mostly in the red after the China flash HSBC/Markit manufacturing purchasing managers’ index showed factory output contracted in the world's second-biggest economy for the first time in six months.

Back home, sentiments remained dampened on the back of depreciation in Indian rupee. The rupee fell to as low as 62.13 on Thursday, its lowest since March 4. The Indian unit was trading at 62.01 at the time of equity markets closing versus previous close of 61.96/97. However, some support came from reports that Private equity investments in the country rose 27% to $3.01 billion in the July-September period, the fifth consecutive quarter of upswing.

Meanwhile, stocks related to software and technology counter remained on buyers’ radar as rupee slumped to its lowest level in nine months against the dollar. Moreover, FMCG stocks like HUL and ITC edged higher as falling inflation raised hopes of higher spending and margins. On the flip side, metal and mining stocks declined after Chinese factory growth stalled and was at six-month low in November 2014. Additionally, public sector oil marketing companies like BPCL and HPCL edged lower on worries small gains in Brent oil and weakness in rupee could affect margins as India imports 80% of its oil requirement.

The NSE’s 50-share broadly followed index Nifty rose around twenty points to regain the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over thirty points to finish above the psychological 28,050 mark. Broader markets, however, struggled to get any traction and ended the session marginally in the red. The market breadth evenly divided, as there were 1,372 shares on the gaining side against 1,637 shares on the losing side while 112 shares remain unchanged.

Finally, the BSE Sensex gained 34.71 points or 0.12%, to 28067.56, while the CNX Nifty added 19.60 points or 0.23% 8,401.90.

The BSE Sensex touched a high and a low of 28118.53 and 27915.23, respectively. The BSE Mid cap index was down by 0.07%, while the Small cap index was down by 0.28%.

The top gainers on the Sensex were Cipla up by 3.23%, SBI up by 2.05%, Wipro up by 1.25%, TCS up by 1.08% and Tata Power up by 1.02%. On the flip side, Sesa Sterlite down by 2.33%, BHEL down by 1.49%, NTPC down by 1.32%, Mahindra & Mahindra down by 1.18% and Bharti Airtel down by 1.11% were the top losers in the index.

On the BSE Sectoral front IT up by 1.27%, Healthcare up by 0.98%, TECK up by 0.81%, FMCG up by 0.39% and Bankex up by 0.37% were the top gainers, while Consumer Durables down by 1.72%, Realty down by 1.52%, Metal down by 0.84%, Power down by 0.78%, Capital Goods down by 0.72% were the top losers in the space.

Meanwhile, Global ratings agency Moody's Investors Service has revised 2015 outlook for Indian non-financial corporates to ‘stable’ from ‘negative’, driven by economic recovery and political stability. The outlook reflects Moody's expectation for fundamental business conditions in the sector over the next 12 to 18 months.

The revised outlook reflects the global rating agency’s review on economic recovery, enhanced access to the global markets and successful implementation of pro-market policies that would lead to improved corporate cash flows and be broadly supportive of business growth.

According to the agency, improved external vulnerability should also reduce foreign exchange risk for Indian corporates, despite gradual interest rate normalization by the US Federal Reserve. Further, Moody’s expects India’s growth to be at 5.6% for the fiscal year ended March, 2015, led by acceleration in manufacturing activity. This development comes on the heels of the Paris-based think-tank pegging India’s growth rate, which languished below 5% for the last two fiscals due to high interest rates, stubborn inflation and weak investment, to grow by 6.6% in 2015-16, up from its last forecast of 5.7% growth in May and to edge higher to 6.8% in 2016-17.

The CNX Nifty touched a high and low of 8,410.85 and 8,353.15 respectively.

The top gainers on Nifty were Kotak Mahindra Bank up by 6.82%, Cipla up by 3.89%, Tech Mahindra up by 3.43%, State Bank of India up by 2.08% and Cairn India up by 1.90%. On the flip side, Jindal Steel & Power down by 3.91%, ZEEL down by 3.49%, NMDC down by 3.01%, SSLT down by 2.37% and DLF down by 1.91% were the top losers.

European markets were trading in red, France’s CAC 40 was down by 0.85%, Germany’s DAX was down by 0.47% and United Kingdom’s FTSE 100 was down by 0.50%.

Asian markets ended mostly in red on Thursday, with Japanese stock rising as yen fell to a seven-year low against the dollar after minutes of the Federal Reserve highlighted a divergence in global monetary policy. In China, the flow of data was again disappointing as an early reading on HSBC/Markit’s manufacturing purchasing managers’ index (PMI) showed a drop to a six-month low of 50.0 in November, from 50.4 in October. A cooling property sector, erratic foreign demand and overcapacity have weighed on its manufacturers and the broader economy this year despite a steady stream of stimulus measures. China’s annual growth slowed to 7.3% in the third quarter, leaving 2014 on track to be slowest in 24 years. Japanese exports grew in October at the fastest pace in eight months, an encouraging sign that global demand could help the country recover from recession and support the central bank’s optimistic economic outlook. The 9.6% annual rise in exports in October was more than double the 4.5% gain expected. Japan’s trade balance rose to a seasonally adjusted -0.98T, from -1.07T in the preceding month. In another sign that the world’s third-largest economy is regaining its footing, a private flash survey showed that factory output grew in November at the fastest pace since March.