Benchmarks trade in green in early deals; Nifty reclaims 7850 mark

Indian equity markets have made a flat but positive opening and are now trading with the gains of over a quarter per cent on account of sustained buying by funds and retail investors. Gains in the other Asian peers too supported on the sentiments. Further, traders are eyeing the winter session of Parliament, beginning today. Prime Minister Narendra Modi on Wednesday called for a collective effort to make the two Houses function smoothly and ensure passage of important legislations, including the goods and services tax bill. At present, Sensex and Nifty were trading above the crucial 25,850 and 7,850 levels respectively.  Apart from blue chips, broader indices too equally participated in the gain with both mid cap and small cap indices trading up by 0.23% and 0.44% respectively. However, caution is likely to prevail in the markets ahead of the derivatives contracts expiry for the month of November.

In the scrip specific development, Lumax Automotive Systems was locked in upper circuit of 20% on the BSE after the company said it filed application with the Board for Industrial and Financial Reconstruction (BIFR) for determination of the measures which shall be adopted with respect to the company. On the other hand, Dr Reddy’s Laboratories has dropped 10% on the BSE on reports that the United States Food and Drug Administration (USFDA) said it might withhold approval of the company's fresh drugs and stop import if no corrective action is taken.

On the global front, the US markets ended flat ahead of the Thanksgiving day break. On the economic front, the US jobless claims dropped more than expected to 260,000. Asian markets were trading in green on growing bets that the European Central Bank was gearing up to deliver further stimulus steps to keep the euro under pressure.

Back home traders were seen piling up position in Realty, Metal, TECK, Consumer Durables and Capital Goods, while selling was witnessed in Healthcare and Oil & Gas. The market breadth on BSE was positive in the ratio of 1189: 489, while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 25860.70, up by 84.96 points or 0.33% after trading in a range of 25769.81 and 25881.23. 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 0.23%, while Small cap index gained 0.44%.

The top gaining sectoral indices on the BSE were Realty up by 0.65%, Metal up by 0.62%, TECK up by 0.56%, Consumer Durables up by 0.47% and Capital Goods up by 0.45%, while Healthcare down by 0.46% and Oil & Gas down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Inds. up by 2.53%, Tata Motors up by 1.73%, Bajaj Auto up by 1.37%, ICICI Bank up by 1.23% and Hindalco up by 0.88%. On the flip side, Dr. Reddys Lab down by 6.76%, Maruti Suzuki down by 0.81%, Lupin down by 0.46%, GAIL India down by 0.35% and HDFC Bank down by 0.26% were the top losers.

Meanwhile, amid government’s serious efforts to pass the key legislations in the present Winter Session of the parliament, global rating agency Moody's Investors Service has said that a failure by the government in implementing key reforms such as Goods and Services Tax (GST) and land acquisition laws could hamper investment and signal a derailed reform prospect. It cautioned that a loss of momentum on reforms may hamper investment and prove to be a 'downside factor' for Indian companies, even as it said most corporates will benefit from strong economic fundamentals and accommodative monetary policy.

The agency raising its doubt, said that it seems highly unlikely that the major reforms will get enacted by the Upper House of Indian Parliament where the ruling coalition is in minority. A failure to implement these reforms could hamper investment amid weak global growth, adding that the Modi administration so far this year has been unable to enact legislation on key reforms, including an unified goods and services tax and the Land Acquisition Bill.

In its other 'downside factors, Moody’s termed loss of reform momentum leading to annual GDP growth falling below 6 per cent, resulting in a deterioration of credit metrics. Also higher interest rates brought on by rising inflation and/or exchange rate volatility, resulting in a tight funding environment. It further said that weak global cues and an impending US rate hike may also have an impact on Indian businesses.

Regarding non-financial corporates, it said a 7.5 percent growth, easing inflation resulting in lower interest rate will lead to improving corporate cash flows and be broadly supportive of business growth. But on the same time, the corporates remain vulnerable to the volatile Indian rupee as against the US dollar and to low commodity prices, which has in turn led to a sharp decline in external trade.

The CNX Nifty is currently trading at 7851.10, up by 19.50 points or 0.25% after trading in a range of 7832.00 and 7860.40. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Sun Pharma Inds. up by 2.43%, Tata Motors up by 1.72%, Bajaj Auto up by 1.52%, ICICI Bank up by 1.29% and Zee Entertainment up by 1.18%. On the flip side, Dr. Reddys Lab down by 6.82%, Idea Cellular down by 0.96%, Maruti Suzuki down by 0.86%, ACC down by 0.78% and Bosch down by 0.71% were the top losers.

Asian markets were trading in green, FTSE Bursa Malaysia KLCI increased 1.02 points or 0.06% to 1,685.44, Shanghai Composite increased 9.14 points or 0.25% to 3,657.07, KOSPI Index increased 19.03 points or 0.95% to 2,028.45, Jakarta Composite increased 26.01 points or 0.57% to 4,611.56, Taiwan Weighted increased 106.91 points or 1.27% to 8,493.04, Nikkei 225 increased 137.27 points or 0.69% to 19,984.85 and Hang Seng increased 221.9 points or 0.99% to 22,719.90.