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 quarter percent, on emergence of buying by funds and retail investors in selected blue-chip stocks. Sentiments remained upbeat with the report that Odisha becoming the 16th state to ratify the constitutional amendment bill passed by Parliament to introduce the goods and services tax (GST), helping cross the important threshold of more than half the number of states needed for the proposed law to be sent for presidential assent.  Some support also came with International Monetary Fund’s (IMF’s) report indicating that Indian economy is likely to continue to grow strongly, crediting its latest assessment to support from private consumption and saying that the goods and services tax will provide a further boost when it is rolled out. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 301.51 crore on September 01, 2016. Also, anxiety among investors also increased with IMD’s report saying that the country’s cumulative rainfall during this year's monsoon so far (till 31 August 2016) was 3% below the long period average (LPA). Meanwhile, Sugar stocks came under selling pressure so as to check spiraling price of sugar, which has crossed Rs 40 per kg. The government has imposed stock limits on sugar mills during the festival season till October-end. However, many infrastructure companies continued their uptrend for the third straight trading sessions after the Cabinet on Wednesday approved an array of measures to help quickly resolve disputes, pump in liquidity and deal with stressed assets.

On the global front, Asian markets were trading mixed on Thursday as investors cautiously awaited U.S. jobs data, due Friday, that could jolt markets out of their summer malaise. Japanese market edged lower, after the Bank of Japan said that the monetary base in Japan surged 24.2 percent on year in August, coming in at 400.998 trillion yen, down from 24.7 percent in July, while the Chinese market was trading higher after the country’s official manufacturing PMI showed the sector expanding for the first time since May as the index beat expectations that it would stay unchanged 49.9 to rise to 50.4 in August. 

Back home, stocks from Realty, Auto and Consumer Durables counters were supporting the markets’ uptrend, while those from Metal, Capital Goods and information technology (IT) counters were adding to the underlying cautious undertone. In scrip specific development, TVS Motor Company rallied after the company reported 20% year on year (YoY) growth in total sales at 274,303 units during the month of August 2016. Moreover, Cadila Healthcare surged after the company said that its oral solid dosage drug manufacturing plant located at SEZ, Ahmedabad has received an Establishment Inspection Report (EIR) from the U.S. Food and Drug Administration (USFDA).

The market breadth remained optimistic as there were 1402 shares on the gaining side against 924 shares on the losing side, while 138 shares remained unchanged.

The BSE Sensex is currently trading at 28497.04, up by 73.56 points or 0.26% after trading in a range of 28428.35 and 28525.87. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.52%, while Small cap index up by 0.48%.

The top gaining sectoral indices on the BSE were Realty up by 1.15%, Auto up by 0.94%, Consumer Durables up by 0.67%, Bankex up by 0.52% and FMCG up by 0.37%, while Metal down by 0.88%, Capital Goods down by 0.23%, IT down by 0.23%, TECK down by 0.20% and Oil & Gas down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 2.72%, Maruti Suzuki up by 2.09%, Tata Motors up by 1.54%, HDFC up by 1.09% and Asian Paints up by 1.06%. On the flip side, Reliance Industries down by 1.87%, Coal India down by 1.72%, Bajaj Auto down by 1.12%, Larsen & Toubro down by 0.67% and Hindustan Unilever down by 0.60% were the top losers.

Meanwhile, to boost regional air connectivity, government is likely to finalize the ambitious Regional Connectivity Scheme (RCS) by this month. The scheme aims to connect remote areas by operationalising unserved and underserved airports. RCS refers to operation of an air transport service between any two airports, of which at least one has been declared by the central government as unserved or under- served.

Government also issued draft rules proposed to be part of the Aircraft Act with respect to RCS and has sought public comments on the draft rules under the amend the Aircraft Act, 1934 for incorporating provisions related to RCS. As per the draft rules, government may establish the Regional Air Connectivity Fund for the purpose of providing viability gap funding to aircraft operators to promote regional air connectivity. The fund would be administered and utilised in the manner as may be specified by the central government.

In order to fund the RCS Fund, the central government may impose a levy on scheduled flights being operated within India at such rates as the central government may notify having regard to the seating capacity of the aircraft used for the scheduled flights and the routes on which such flights are operated. Last week, the government notified excise duty of 2 per cent for jet fuel purchased from airports that come under RCS. Under the scheme, announced in the new civil aviation policy, the government has proposed capping fares at Rs 2,500 for one-hour flights on unserved and underserved routes besides various financial concessions for airlines. 

The CNX Nifty is currently trading at 8788.25, up by 13.60 points or 0.15% after trading in a range of 8770.10 and 8798.45. There were 32 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Adani Ports &Special up by 2.63%, Maruti Suzuki up by 2.06%, Tata Motors - DVR up by 1.86%, Tata Motors up by 1.60% and Bank of Baroda up by 1.52%. On the flip side, Idea Cellular down by 2.99%, Reliance Industries down by 1.98%, Coal India down by 1.70%, Hindalco down by 1.62% and Bajaj Auto down by 1.10% were the top losers.

Asian markets were trading mixed; Shanghai Composite rose 0.05%, KOSPI Index increased 0.29%, Jakarta Composite added 0.21% and Hang Seng was up by 0.51%. On the flip side, Nikkei 225 decreased 0.08%, Taiwan Weighted shed 0.15% and FTSE Bursa Malaysia KLCI was down by 0.02%.