Markets post modest gains despite rounds of volatility

Indian markets after witnessing correction in last session remained in consolidation mood on Wednesday, a day ahead of the F&O series expiry. However the volatility increased owing the ensuing expiry and the major bourses remained in red for most part of the day with bouts of short covering and value buying taking the markets in green terrain. Meanwhile, the start was on a sluggish note tailing the mixed global cues and concern of weak GDP numbers, after ratings agency Icra in its latest report said that the Indian economic growth may have slowed to 5 per cent in the July-September quarter due to a low kharif harvest, a slowdown in exports and muted government spending. Traders also remained concerned with the weakness in rupee, which after a positive start turned lower.

The global cues remained mixed and some of the major indices in the Asia Pacific region ended lower. Though, broadly they moved higher for a fourth day of gains, as materials and health-care shares advanced. Hang Seng market bounced back from its last session fall and ended higher by over a percent. The European markets advanced for a fourth day, led by Germany’s DAX Index, which was heading for its 10th straight day of gains, the longest winning streak since May 2013.

Back home, markets bounced back in second half supported by surge in the realty sector, though the gains remained modest most of the sectoral indices on the BSE managed a positive close. The Centre hiked the floor area ratio (FAR) norms in the central Capital Delhi, in order to give a boost to the vertical development of real estate. FAR in respect of plots of 750-1000 sq m size has been enhanced from the current 150 per cent to 200 per cent, while the same has been increased from 120 per cent to 200 per cent for plots of 1000 sq m and above. However, profit-taking by funds and retail investors ahead of November month F&O contract expiry tomorrow was visible in the market. Some selling was witnessed in companies having business interest in Nigeria, after country’s central bank devalued the nation’s currency by 8% and raised interest rates sharply. Bajaj Auto and Bharti Airtel were down by 1-3%. Nigeria is a major export market for Bajaj Auto, accounting for nearly 35 percent of its revenues. Bharti Airtel too is having considerable business in Nigeria and it is its biggest market in Africa, falling currencies would impact margins of these companies. On the other hand the gas stocks despite giving up some of their profit, posted good gains for the day, after the Appellate Tribunal for Electricity (APTEL) gave its verdict in favour of Gujarat State Petronet Limited (GSPL) against the Petroleum and Natural Gas Regulatory Board (PNGRB). Other gas majors such as IGL and Gujarat Gas are hopeful of benefiting in the future from the positive order. GSPL gained over 2%, while Gujarat gas surged by over 16%, IGL too ended higher by around 4% for the day.

Finally, the BSE Sensex gained 48.14 points or 0.17%, to 28386.19, while the CNX Nifty added 12.65 points or 0.15% 8,475.75.

The BSE Sensex touched a high and a low of 28470.15 and 28261.31, respectively. The BSE Mid cap index was up by 0.62%, while the Small cap index was up by 1.12%.

The top gainers on the Sensex were GAIL India up by 2.75%, Sesa Sterlite up by 2.34%, BHEL up by 2.26%, Hindalco up by 2.21% and ITC up by 2.14%. On the flip side, Bharti Airtel down by 2.43%, ICICI Bank down by 1.45%, Bajaj Auto down by 0.90%, Reliance Industries down by 0.50% and Maruti Suzuki down by 0.28% were the top losers in the index.

On the BSE Sectoral front Realty up by 4.03%, Power up by 1.13%, Metal up by 1.08%, FMCG up by 1.07% and PSU up by 0.54% were the top gainers, while TECK down by 0.41%, Healthcare down by 0.34%, Bankex down by 0.30%, IT down by 0.16% and Infrastructure down by 0.01% were the top losers in the space.

Meanwhile, exhibiting some confidence in the economy, Minister of State for Finance Jayant Sinha underscored that India had the potential to become a $5 trillion economy in the next 10 years, if it grows at an average 7-8%.

He further highlighted that target of gross domestic product (GDP) reaching at least $5 trillion at the end of 10 years was possible given the strong capital inflows and expected appreciation of Indian currency. A GDP of $5 trillion would also mean that India had the potential to add another $3 trillion in market capitalisation in its stock exchanges in the next decade.

Presently, India economy accounts for $2 trillion and has grown at 6-7% CAGR in the last 10 years. He emphasized that the country needs to sustain a growth rate of 7-8% to have at least a chance of offering jobs to 10 million young people.

Further, the minister also pointed that economy has genuinely lacked in terms of job creation. While, the organized sector barely creates 2-3 million jobs a year, there are around 100 million unemployed people out there. Nevertheless, he pointed that such extra-ordinary growth could only be achieved through economic growth.

The CNX Nifty touched a high and low of 8,500.30 and 8,438.65 respectively.

The top gainers on Nifty were DLF up by 7.08%, GAIL up by 2.84%, BHEL up by 2.26%, ITC up by 2.25% and Asian Paints up by 2.22%. On the flip side, ZEEL down by 4.79%, Jindal Steel & Power down by 3.03%, Bharti Airtel down by 2.82%, HCL Technologies down by 1.54% and ICICI Bank down by 1.51% were the top losers.

Most of European markets were trading in green, Germany’s DAX was up by 0.51% and United Kingdom’s FTSE 100 was up by 0.17%, while France’s CAC 40 was down by 0.08%.

Almost all the Asian equity benchmarks barring, Nikkei 225, ended higher on Wednesday, following Chinese shares which extended their rally as insurers led gains. Further, the speculation that an interest-rate cut will boost earnings supported the markets. Meanwhile industrial shares gained on prospects for increased investment on bets China's central bank will make further efforts to help lower borrowing costs. China’s benchmark money-market rate fell for a third day after the central bank lowered the interest rate it paid on 14-day repurchase agreements. The Japanese market eased slightly, as investors waited for more US data on jobless claims, durable goods orders, and personal income and spending as well as new home sales and pending homes sales figures due later in the day for fresh clues about the outlook for US interest rates. The safe-haven yen strengthened against the dollar and weighed on the sentiments of the Japanese market.