Benchmarks recover from day's low; bounce back into positive territory

Reversing gears, Indian equity markets have entered into positive territory in late morning deals on emergence of buying by funds and retail investors in select stocks. Sentiments got boost on the report that the Ministry of Finance will hold interactive meetings with Foreign Portfolio Investors (FPIs) and domestic financial market participants as part of the Government's endeavor to improve ease of doing business in financial markets.Further, in order to attract more retail investors into the stock markets, the Department of Disinvestment (DoD) has suggested tax incentives for small investors. Some support also came with the monthly SBI Composite Index that has stated that country's manufacturing sector growth improved in October largely driven by the manufacturing sector, but mining and electricity are still acting as a drag on the economic activity. However, investors remained cautious as Standard & Poor's maintained India's sovereign rating of lowest investment grade of 'BBB-minus' and a 'stable' outlook. The agency added it is unlikely to change country's rating this year or in 2016 based on its current set of forecasts. Furthermore, Reserve Bank Governor Raghuram Rajan said that the country cannot have a GDP growth of 9 per cent until it makes 'tremendous investments' and improves supply situation that boosts demand, but warned against populist policies.

On the global front, Asian markets were mostly lower on Tuesday after commodity prices languished in the wake of China's soft growth data and dampened risk sentiment. Overnight, US stocks ended slightly higher as investors were cautious at the start of a heavy week of earnings, but advances in top tech names gave some support.

Back on street, stocks from Oil & Gas, Realty and TECK counters were supporting the markets’ uptrend, while those from Metal, Auto and Banking counters were adding to the underlying cautious undertone. In scrip specific development, shares of SKS Microfinance have surged after the company reported 53% growth in its total income for the September quarter at Rs.291.26 crore, compared with Rs.190 crore in the same period last year. On the other hand, shares of Gati have dipped 6% after the company reported  16% year on year (YoY) drop in consolidated net profit at Rs 5.79 crore for the quarter ended September 30, 2015 (Q2), due to lower operational income and higher employee cost.

The market breadth on BSE was positive, out of 2330 stocks traded, 1432 stocks advanced, while 766 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27396.61, up by 31.69 points or 0.12% after trading in a range of 27323.45 and 27413.44. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.70%, while Small cap index up by 0.70%.

The top gaining sectoral indices on the BSE were Power up by 1.84%, Consumer Durables up by 1.05%, IT up by 0.96%, TECK up by 0.69% and Capital Goods up by 0.69%, while Metal down by 0.33%, Oil & Gas down by 0.22% and FMCG down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.31%, TCS up by 1.41%, NTPC up by 0.94%, Infosys up by 0.77% and BHEL up by 0.77%. On the flip side, Cipla down by 2.85%, Hindalco down by 1.45%, Vedanta down by 1.25%, ONGC down by 1.05% and Hero MotoCorp down by 0.84% were the top losers.

Meanwhile, Reserve Bank Governor Raghuram Rajan has said that if India don’t make tremendous investments and improves its supply situation, it will not be able to have a GDP growth of 9 per cent. In order to achieve the growth, he said there is a need for large investments which could lead to higher demand. However, he warned against populist policies saying they are driven by a desperate need for growth while the fact is that the real ways of growth are really hard.

Rajan further said that he see 9 per cent growth as a situation where India is investing tremendous amount and thus creating the supply which will then help the demand. Hence, the country should not just boost the demand but also need to boost supply, which means a lot of work on a number of fronts which currently the government is engaged in.

He however said that 9 per cent growth rate is a steady process and cannot be attained overnight. He stated that there is a need to eliminate the supply constraints including human capital. Besides, Rajan said that “India cannot have much higher levels of growth without inflation and for that the country have to create underlying supply conditions that would allow India to sort of have a much higher demand.

The CNX Nifty is currently trading at 8284.95, up by 9.90 points or 0.12% after trading in a range of 8258.40 and 8290.00. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 2.74%, Tata Motors up by 2.22%, Power Grid up by 2.02%, PNB up by 1.71% and TCS up by 1.44%. On the flip side, Cipla down by 3.09%, Hindalco down by 1.79%, ACC down by 1.25%, Vedanta down by 1.20% and Cairn India down by 1.19% were the top losers.

Asian markets were trading mostly in red, Taiwan Weighted was down by 0.05%, Hang Seng was down by 0.53%, FTSE Bursa Malaysia KLCI down by 0.26% and Shanghai Composite was down by 0.06%. On the flip side, KOSPI Index up by 0.35%, Jakarta Composite up by 0.46% and Nikkei 225 was up by 0.52%.