Benchmarks hold modest gains after recovering from day’s low

After recovering from day’s low, benchmark equity indices were holding their head above water and trading up with modest gains of around 0.11%-0.18%, on emergence of buying by funds and retail investors in select stocks. Sentiment on the street improved with Prime Minister Narendra Modi, asserting that infrastructure could play a pivotal role in bolstering India's economic growth, he has said that concerted efforts have led to rolling out of stuck projects worth Rs 4 lakh crore. Some support also came with Finance Minister Arun Jaitley’s statement that the government has set the direction of the economy and restored confidence of both domestic and foreign investors in India, while promising steps to strengthen the economy's base to ensure the impact of any global turmoil is transient. However, losses remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 991.87 crore on November 5, 2015. Further, Investors remained wary ahead of Bihar election verdict after exit polls showed a neck-to-neck fight between NDA and JDU-led grand alliance in Bihar. If the grand alliance of JDU-RJD-Congress gains an edge, market could see some temporary suffering.

On the global front, Asian shares were subdued in early trade as investors remained cautious ahead of a U.S. jobs report that's likely to influence whether the Federal Reserve raises interest rates in December. Overnight, US stocks edged lower on Thursday as investors digested mixed tech and healthcare earnings a day ahead of Friday's US jobs report. The Dow Jones Industrial Average was flat at the close, while the broad-based S&P 500 lost 0.11% and the tech-rich Nasdaq was the laggard, dropping 0.29%. Back on street, stocks from Realty, IT and TECK counters were supporting the markets’ uptrend, while those from Power and Metal counters were adding to the underlying cautious undertone. In scrip specific development, Shares of drug maker Dr Reddy’s Lab have cracked over 9% after the company received a warning letter issued by the USFDA dated November 5 pertaining to its API manufacturing facilities situated at Srikakulam in Andhra Pradesh and Miryalaguda in Tamil Nadu and also at its Oncology formulation manufacturing  facility located in Duvvada in Andhra Pradesh. Furthermore, Shares of Bank of Baroda have plunged after the bank’s net profit fell by almost 90% to Rs 124.48 crore on 4.09% increase in total income to Rs 12300.40 crore in Q2 September 2015 over Q2 September 2014.

The market breadth on BSE was negative, out of 2134 stocks traded, 909 stocks advanced, while 1122 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26334.41, up by 30.21 points or 0.11% after trading in a range of 26190.18 and 26438.86. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in mix; the BSE Mid cap index was up by 0.07%, while Small cap index down by 0.17%.

The top gaining sectoral indices on the BSE were Realty up by 0.80%, IT up by 0.77%, TECK up by 0.73%, Capital Goods up by 0.65%, Oil & Gas up by 0.36%, while Power down by 0.69% and Metal down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 3.05%, Infosys up by 1.45%, Vedanta up by 1.28%, HDFC up by 1.25% and Larsen & Toubro up by 1.23%. On the flip side, Dr. Reddys Lab down by 12.61%, Tata Steel down by 2.13%, GAIL India down by 1.90%, ICICI Bank down by 1.09% and Tata Motors down by 1.06% were the top losers.

Meanwhile, the government and the Central bank have reached a broad consensus on composition of the interest rate setting Monetary Policy Committee (MPC).  Reserve Bank of India governor Raghuram Rajan has said that the MPC agreement has been largely done and only fine tuning is left. In order to decide on interest rate, the government has proposed to set up MPC, which will consist of representatives from the Finance Ministry and RBI.

Under the current situation the government appoints RBI Governor, who controls the monetary policy and has veto power over the existing advisory committee of RBI members and outside appointees that sets rates.

Earlier in July, the revised draft of the Indian Financial Code (IFC) was released by the ministry which suggested doing away with RBI Governor's veto power and proposed a 7-member MPC to take rate decisions by a majority vote. Of the seven members, four are proposed to be government nominees and the rest from RBI. Rajan has said the final call on the timing of implementing MPC will be taken by the Finance Ministry but he is not opposed to the governor’s veto powers being taken away.

Highlighting the benefits of an MPC the governor Rajan said that studies indicate that policies set up by a committee tend to be better that those set by a single person. He said a committee-based structure also ensures greater continuity in policy and help mitigate pressure that may fall on a single person responsible for policy setting.

The CNX Nifty is currently trading at 7970.05, up by 14.60 points or 0.18% after trading in a range of 7927.25 and 8002.65. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were SBI up by 3.06%, PNB up by 1.54%, HDFC up by 1.52%, Infosys up by 1.44% and Vedanta up by 1.28%. On the flip side, Dr. Reddys Lab down by 12.89%, Tata Steel down by 2.17%, GAIL India down by 1.92%, Tata Power down by 1.75% and ICICI Bank down by 1.13% were the top losers.

Asian markets were trading mixed, Hang Seng was down by 0.68%, Taiwan Weighted down by 1.72%, KOSPI Index down by 0.42% and Jakarta Composite down by 0.3%. On the flip side, FTSE Bursa Malaysia KLCI was up by 0.12%, Shanghai Composite up by 0.79% and Nikkei 225 was up by 0.61%.