Benchmarks manage to keep head above water; eke out slender gains

Indian equity benchmarks managed to keep their head above water and ended the session marginally in green as investors opted to buy beaten down but fundamentally strong stocks after six sessions of continuous drubbing. Overall sentiments remained up-beat with Moody's Investors Services projecting stable growth rate for India and stating that the economy would grow at 7.5 percent in the current fiscal and improve marginally in the following year. It expects India's real GDP to grow at 7.5 percent in the financial year ending March 31, 2016 (FY16) and 7.6 percent in FY17. Traders also drew some encouragement with eight core sectors rising to 4-month high of 3.2 percent in September because of sharp pick-up in fertiliser production and electricity generation. Core sector that comprises nearly 38 percent of India’s total industrial production had grown at 2.6 percent in the same month of last year.

Global cues too remained supportive with Asian markets ending mostly in green on Tuesday helped by buoyant US markets and recent data that indicated the global economy may have turned a corner, though wary central banks signalled a recovery may be anything but durable. Global manufacturing growth accelerated to a seven-month high in October but remained muted despite factories cutting their prices at the steepest rate since May 2013. However, European counters were trading mostly in red in early deals ahead of construction data for October due from the Office for National Statistics later in the day.

Back home, traders pared most of their initial gains in last leg of trade and domestic bourses dipped in red couple of times but somehow managed to end up in green. Gains remained capped on account of disappointing Q2 numbers from some of the corporate firms. Oberoi Realty declined after its September quarter earnings came in below the estimates while, rating agency CARE reported 27.78% fall in its net profit at Rs 37.85 crore for the quarter ended September 30, 2015. Depreciation in Indian rupee too weighed down sentiments. The partially convertible rupee was trading at 65.68 per dollar at the time of equity market closing against the Monday’s close of 65.59 on the Interbank Foreign Exchange.

Stocks related to banking space, that were trading mostly in green in early deals ended up in negative terrain after Fitch Ratings said that formation of stress assets of Indian banks' is likely peak this fiscal year. It said that that the share of bad loans to total loans would improve after touching a high of 11.1% in fiscal year march 2015.

The NSE’s 50-share broadly followed index Nifty rose by ten points and ended above the psychological 8,050 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over thirty points to finish near the psychological 26,600 mark. Broader markets too traded with traction throughout the trade and ended the session with a gain of around half a percent. The market breadth remained in favor of advances, as there were 1,482 shares on the gaining side against 1,217 shares on the losing side while 129 shares remain unchanged.

Finally, the BSE Sensex gained 31.44 points or 0.12% to 26590.59, while the CNX Nifty added 9.90 points or 0.12% to 8060.70. 

The BSE Sensex touched a high and a low 26732.24 and 26514.48, respectively. The BSE Mid cap index was up by 0.28%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were IT up by 0.91%, Oil & Gas up by 0.82%, PSU up by 0.70%, Power up by 0.66% and TECK up by 0.64%, while Consumer Durables down by 0.71%, Capital Goods down by 0.54%, Realty down by 0.12% and Bankex down by 0.11% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.15%, Mahindra & Mahindra up by 1.96%, ONGC up by 1.64%, Hindalco up by 1.61% and Vedanta up by 1.44%. On the flip side, Lupin down by 1.38%, Tata Motors down by 1.33%, Larsen & Toubro down by 1.17%, Tata Steel down by 1.09% and Bharti Airtel down by 1.01% were the top losers.

Meanwhile, the government has approved the proposal to enable EXIM bank for providing a concessional finance to support Indian companies bidding for strategically important infrastructure projects abroad. This will help Indian companies to bid for large projects abroad.

The finance ministry has said that the strategic importance of a project to deserve financing under this scheme will be decided on a case by case basis by a Committee chaired by Secretary (DEA) and it will include members from Department of Expenditure, Ministry of External Affairs, Department of Industrial Promotion and Policy, Department of Commerce, Department of Financial Services and Ministry of Home Affairs.

Further it stated that the committee will have powers on conditions within reasonable limits on a case by case basis during first two years of implementation of the scheme and will also consider financing strategic projects through public sector banks other than EXIM Bank on the same terms. The committee may insist on sourcing of at least 75 per cent of the project requirements from India, if it is found compatible with the requests for bids, adding that the experience with this scheme will be evaluated after two years. The repayment of the loan would be guaranteed by the foreign government.

There are a number of Indian large project implementation companies which have developed a lot of expertise in building large infrastructure projects. However, due to higher cost of finance in India, they have not been able to win contracts abroad. Hence, need was felt to help such Indian Companies to secure contracts abroad.

The CNX Nifty touched a high and low 8100.35 and 8031.75 respectively.

The top gainers on Nifty were NTPC up by 2.41%, Power Grid up by 2.33%, ACC up by 1.91%, Mahindra & Mahindra up by 1.75% and Hindalco up by 1.67%. On the flip side, Asian Paints down by 1.92%, Lupin down by 1.61%, Tata Steel down by 1.57%, Tata Motors down by 1.46% and Adani Ports &Special down by 1.45% were the top losers.

European Markets were trading in the red; France’s CAC was down by 0.01% , Germany’s DAX was down by 0.31% and  UK's FTSE was down by 0.11%.

The Asian equity markets ended mostly in green on Tuesday, taking cues from buoyant US markets and recent data that indicated the global economy may have turned a corner, though wary central banks signalled a recovery may be anything but durable. Japan’s stock exchange was closed on account of ‘Culture Day’ holiday.  China’s private and export-oriented companies saw manufacturing activity shrink again in October although the decline was not as bad as that in the month before, suggesting the economy was stabilizing. The Caixin China Purchasing Managers’ Index landed at 48.3 last month, up from 47.2 in September, to reach a four-month high. South Korea’s annual inflation accelerated to an 11-month high in October, raising the hurdle to further monetary easing as the central bank showed it was wary about taking borrowing costs even lower amid rising household debt and external risks. The consumer price index rose 0.9 percent in October from a year earlier, driven by rising prices in the services sector and marked the fastest rise since November last year. Annual core inflation rose 2.3 percent in October to the highest since February this year. The Bank of Korea promised to keep monetary policy easy, but stopped short of signaling additional rate cuts as it remained wary of rising household debt.