Benchmarks add gains on firm European cues

Indian equity markets added gains and continued their firm trade hovering near the highest point of the day in late afternoon session amid firm European cue. Market participants continued to pile up positions in risky assets on a bigger-than-expected interest rate cut by RBI’s yesterday. Sentiments also remained up-beat after the Chief Economic Advisor Arvind Subramanian has said that the government is committed to contribute its share by adhering to its fiscal deficit target so that inflationary pressures remain under control. On the global front, European markets were trading with a gain of around two percent after another revision of the UK GDP has shown that the economy has expanded at an annual pace of 2.4% during the second quarter vs. 2.6% expected and 0.7% inter-quarter. Asian markets are trading mostly in green. Back home, Metal shares rebounded after the sharp fall in the previous session tracking overnight gains in commodity prices. However, banking shares have eased after gains in the previous session post the surprise rate-cut by the RBI on Tuesday.

The BSE Sensex is currently trading at 26064.41, up by 285.75 points or 1.11% after trading in a range of 25918.21 and 26079.07. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.29%, while Small cap index up by 0.85%.

The gaining sectoral indices on the BSE were Metal up by 2.69%, FMCG up by 1.91%, Realty up by 1.61%, Power up by 1.60% and TECK up by 1.51%, while Bankex down by 0.68% was the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.47%, Tata Steel up by 3.97%, BHEL up by 3.57%, Coal India up by 3.23% and Hindustan Unilever up by 2.91%. On the flip side, Vedanta down by 2.61%, Axis Bank down by 1.99%, SBI down by 1.92%, TCS down by 0.39% and HDFC down by 0.15% were the top losers.

Meanwhile, Reserve Bank of India (RBI) after surprising everyone with more generous policy rate cuts of 50 basis points, released the results of different forward-looking surveys. The Inflation Expectations Survey of Households for September 2015 (41st round), which captures the inflation expectations of 4,903 urban households across 16 cities, for the next three-month period and the next one-year period, expect inflation to remain unchanged in double digits for the next three months, with many believing that inflation may even fall. Households expect inflation to be 10.5 percent in the next three months, up from 10.1 percent in the previous survey. The proportion of respondents expecting prices to rise by 'more than the current rate' for prices in general as well as those in various product groups decreased nominally compared with the previous round of survey. The survey showed that retired persons, self-employed, housewives and daily workers have comparatively higher inflation expectations for three-month ahead period based on median inflation rates.

The Consumer Confidence Survey providing an assessment of perceptions of respondents on general economic conditions, showed that net responses on current as well as future economic conditions decreased as compared to June 2015 round. Moreover, the proportion of respondents reporting improvement in current as well as future economic conditions, which depicted an upward movement since December 2014, declined in September 2015. As regards perceptions relating to spending on essential items, more than 80 per cent respondents reported increase for the current as well as future period. However, as regards price levels and inflation, current sentiments and future expectations showed improvement in this round of survey.

A survey of professional forecasters on macroeconomic indicators said real Gross Value Added at basic price (GVA) will increase by 7.4 percent in 2015-16. In 2016-17, GVA is expected to increase by 8 percent. Agriculture & allied activities and services are expected to grow 1.5 percent and 9.4 percent, respectively. Industry growth forecast has been placed at 6.7 percent.

The Order Books, Inventories and Capacity Utilisation Survey (OBICUS), which captures actual data from the companies in the manufacturing sector showed that Capacity Utilisation recorded seasonal drop in Q1:2015-16 and stood at 71.5 per cent, higher than its level during the same quarter of the previous year. While, the new orders growth bounced back to positive territory on a y-o-y basis. On a q-o-q basis, it declined marginally in Q1:2015-16. The finished goods inventory to sales ratio (FGI/S) continued to increase in Q1:2015-16 and stood at a higher level as compared to the position in Q1:2014-15.

The Industrial Outlook Survey conducted during July-September 2015 revealed that the outlook on business sentiment remained range-bound in the third quarter of 2015-16, attributed to the reduced pessimism in inventory of raw material, inventory of finished goods along with the reduced optimism in exports.

The CNX Nifty is currently trading at 7918.75, up by 75.45 points or 0.96% after trading in a range of 7874.50 and 7925.75. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 5.51%, Bharti Airtel up by 4.74%, Cairn India up by 4.51%, Tata Steel up by 4.22% and BHEL up by 3.70%. On the flip side, Bank Of Baroda down by 2.46%, Tech Mahindra down by 2.41%, Vedanta down by 2.32%, Axis Bank down by 2.08% and SBI down by 1.86% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite increased 14.64 points or 0.48% to 3,052.78, FTSE Bursa Malaysia KLCI surged 17.69 points or 1.1% to 1,621.01, KOSPI Index gained 19.96 points or 1.03% to 1,962.81, Jakarta Composite jumped 35.78 points or 0.86% to 4,214.19, Taiwan Weighted rose 48.89 points or 0.6% to 8,181.24, Hang Seng added 289.7 points or 1.41% to 20,846.30 and Nikkei 225 was up by 457.31 points or 2.7% to 17,388.15. On the flip side, Straits Times was down by 2.12 points or 0.08% to 2,785.82.

European Markets were trading in green; Germany’s DAX gained 2.17%, France’s CAC surged 2.27% and UK’s FTSE was up by 1.96%.