Markets trade flat with positive bias ahead of RBI’s monetary policy review

In the extremely range-bound session of trade, Indian equity benchmarks altering between positive and negative territory, were now trading flat with bit of positive bias as investors and foreign funds were adopting a cautious approach, ahead of a long weekend and the upcoming monetary policy meeting on September 29. The broader markets are however, outperforming the benchmark indices- BSE Midcap and Smallcap indices were up by over 0.65% each. Sentiment got some support with Niti Aayog vice-chair man Arvind Panagariya’s statement that the economy is now in a much better shape than before and backs the idea of aggressive rate cuts. He said that growth rate has turned around and shows signs of acceleration. Also, the World Bank President Jim Young Kim has said that reforms initiated by Prime Minister Narendra Modi have had a huge impact on the way world looks.  Bank stocks surged after (RBI) announced measures to enhance commercial banks' ability to recover loans to borrowing entities which are under stress primarily due to operational/managerial inefficiencies of the existing promoters.  On the flip side, IT stocks came under pressure after Accenture forecast a muted 5-8 per cent revenue growth for the FY16 fiscal year, while Metal stocks witnessed selling pressure after global copper prices remained stuck near 3-month lows.

On the global front, Asian stocks were mostly lower in early trade, following Wall Street's loss last week as investors looked ahead to Chinese and U.S. economic data. Besides, U.S. stocks suffered their third weekly loss this month after health care stocks slumped on Friday. Back home, Indian rupee rose 14 paise at 66.02 against the US dollar in early trade on fresh selling of the American currency by exporters.

Back on street, stocks from Realty, Consumer Durables and Banking counters were supporting the markets’ uptrend, while those from Metal, IT and Teck counters were adding to the underlying cautious undertone. In scrip specific development, shares of Gammon India have surged after the company secured the Engineering, Procurement & Construction (EPC) project worth Rs 1,709.99 crore from National Highways Authority of India (NHAI). On the other hand, Shares of Sun Pharmaceutical Industries and Sun Pharma Advanced Research Company (SPARC) have declined after the US Food and Drugs Administration (USFDA) withdrew an approval granted in March to SPARC’s anti-epileptic drug due to regulatory compliance issues at Sun Pharma's Halol plant.

The market breadth on BSE was positive, out of 2128 stocks traded, 1306 stocks advanced, while 732 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25879.00, up by 15.50 points or 0.06% after trading in a range of 25738.54 and 25936.89. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.67%, while Small cap index up by 0.80%.

The top gaining sectoral indices on the BSE were Realty up by 1.95%, Consumer Durables up by 1.41%, Bankex up by 1.10%, FMCG up by 0.44% and Power up by 0.16%, while Metal down by 1.14%, IT down by 0.37%, TECK down by 0.28% and Auto down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 5.25%, Lupin up by 2.29%, Hindustan Unilever up by 1.93%, SBI up by 1.69% and Axis Bank up by 1.59%. On the flip side, Sun Pharma down by 3.01%, Coal India down by 2.67%, Infosys down by 1.92%, Vedanta down by 1.42% and Hero MotoCorp down by 1.39% were the top losers.

Meanwhile, Raising serious doubts over the rate at which the government's ambitious 'Make in India' initiative is progressing, a recent survey from the Boston Consulting Group (BCG) and apex industry chamber Confederation of Indian Industry (CII) has said that its target of creating 100 million jobs and achieving 25 percent of GDP from manufacturing sector by 2022 may be difficult to meet.

The CII-BCG report entitled 'Future of Indian Manufacturing: Bridging the Gap' noted that though manufacturing exports increased from $ 188 billion in 2011 to $203 billion in 2014. India's share in global market still remains at 1.5 percent, as expected, this shortfall is reflected in job creation in this sector. 'Make in India' aspires to create 100 million jobs by 2022 in the manufacturing sector. 'However, in reality, only four million jobs are estimated to have been created in the sector since 2010. Extrapolating this growth of 1.5 percent, we will fall short of the target by 92 million jobs by 2022'.

However, as per the report the outlook is broadly positive given the growth in IIP as well as clear uptick in the manufacturing FDI.  The overall IIP grew 3.2% in the first quarter and 14 of the 22 sub-sectors showed positive growth. The buzz around Make in India has been positive and many large ticket announcements have been made. The report also notes the efforts on reforms related to land, labor, GST and procedural simplifications. Though, only 20% of the executives surveyed feel that there has been an improvement in 'ease of doing business'. Nevertheless, 42% of the executives feel that the government's manufacturing drive has been effective, as against the 21% who feel otherwise.

The report also highlighted that in a positive development, several states are upping their game to attract manufacturing investments. The report calls for continuing action by the State and the Central government on reforms, simplification and infrastructure build-out. In addition, it also highlights the industry responsibility to invest in creating long term capabilities and shun the urge to adopt “jugaad” methods.

The CNX Nifty is currently trading at 7873.05, up by 4.55 points or 0.06% after trading in a range of 7831.35 and 7893.95. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 5.20%, Idea Cellular up by 3.45%, Adani Ports &Special up by 2.52%, Lupin up by 2.23% and Yes Bank up by 2.05%. On the flip side, Sun Pharma down by 3.13%, Coal India down by 2.54%, Ultratech Cement down by 2.24%, Infosys down by 2.00% and Cairn India down by 1.86% were the top losers.

Asian markets were trading in red; Nikkei 225 was down by 1.1%, Jakarta Composite down by 1.62%, Straits Times down by 1.51%, FTSE Bursa Malaysia KLCI down by 0.37% and Shanghai Composite down by 0.3%.