Local markets settle with marginal gains; Nifty ends above 8800 mark

The Indian equity markets witnessed a lack-luster and volatile day of trade on Monday after showing firm trend in Friday’s session. Uncertainty over monetary policies has helped reignite volatility in global markets as well as the local markets, with traders split over what action the BOJ will undertake in its review Wednesday, while bets on an interest-rate hike from the Fed this week remain somewhat strong as inflation data for August rose more than projected. Back home, investor got some comfort  with DIPP Secretary Ramesh Abhishek’s statement that implementation of the goods and services tax (GST) is bound to be a game changer for India’s manufacturing sector and will enhance ease of doing business in the country. some support also came with report that Finance Ministry officials are expected to pitch a ratings upgrade to Moody’s by stressing upon the various reform initiatives taken by the Narendra Modi government, including the GST, bankruptcy code, and inflation targeting through the monetary policy committee, among others.

Meanwhile, good buying was observed in metal counters, as the Union Steel Minister Chaudhary Birendra Singh claimed that the country will be ranked after Japan and America in steel production in December this year as a result of the Prime Minister's various initiatives like Skill India, Startup India and Make in India. Shares of select textile companies also gained traction on expectation of pick-up in sales in coming months in light of good monsoon, seventh pay commission payouts and festive season. Tyre manufacturers like MRF and Ceat jumped more than 6 percent each on expectation of a lower natural rubber prices that could improve the profit margin of tyre companies as it accounts around 40 percent of input cost. On the other hand, mild selling was witnessed in select pharma stocks on the report that the government slashed prices of 10 more drugs while bringing eight new medicines, including paracetamol, under price control for the first time in its bid to cap cost of over 800 plus formulations to make them affordable. Many stocks specific activities were seen during the session like Petron Engineering Construction rallied after the company received a Letter of Intents (LOIs) from Shree Cement, for civil work at their cement plants at Aurangabad, Bihar and at Gulbarga, Karnataka for a total contract value of approximately Rs 50 crore. Furthermore, Vipul has surged after the company received environmental clearance for its project Aarohan at Golf Course road in Gurgaon.

On the global front, Asian markets ended the session on a firm note as hopes of BOJ easing, positive home price data from China and rallying oil prices helped investors shrug off news related to possible terrorist attacks in the United States. Chinese shares rose notably as traders returned from the mid-autumn festival long weekend. New home prices, excluding subsidized housing, rose in August in 64 out of 70 cities tracked by China’s statistics bureau, compared with 51 cities in July. Another report from the country's central bank showed that confidence among Chinese entrepreneurs has picked up for the second quarter in a row in 2016. Meanwhile, European markets were up on Monday, led by commodity shares, putting the benchmark on course for its strongest gain in more than two weeks.

Back home, the local benchmarks started the session moderately higher, tracking the Asian peers which traded mostly in the green on account of rebound in oil prices. Thereafter, the frontline indices soon gathered momentum and traded with over quarter percent gains through the morning session of trade.  However the indices failed to capitalize on the initial momentum in the afternoon session and could not sustain the high levels and succumbed to profit booking. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by over quarter percent to settle over the crucial 8,800 support level, while Bombay Stock Exchange’s sensitive Index-Sensex accumulated thirty five points and closed over the psychological 28,600 mark. The broader markets succeeded to outperform their larger peers as the BSE’s midcap gained 0.63% and smallcap index jumped 0.52%.

The market breadth remained optimistic as there were 1496 shares on the gaining side against 1243 shares on the losing side while 235 shares remained unchanged.

Finally, the BSE Sensex ended up by 35.47 points or 0.12% to 28634.50, while the CNX Nifty gained 28.55 points or 0.33% to 8,808.40. 

The BSE Sensex touched a high and a low 28714.77 and 28552.55, respectively. There were 21 stocks advancing against 9 stocks declining on the index. The broader indices ended in green; the BSE Mid cap index rose 0.63%, while Small cap index was up by 0.52%.

The top gaining sectoral indices on the BSE were Realty up by 1.60%, Metal up by 1.33%, PSU up by 0.88%, Power up by 0.76% and Oil & Gas up by 0.70%, while FMCG down by 0.43% was the lone losing index on BSE.

The top gainers on the Sensex were TCS up by 1.96%, ICICI Bank up by 1.61%, Adani Ports &Special up by 1.60%, Coal India up by 1.17% and ONGC up by 1.07%. On the flip side, Maruti Suzuki down by 1.48%, Bajaj Auto down by 1.15%, Axis Bank down by 1.11%, Hero MotoCorp down by 0.90% and ITC down by 0.86% were the top losers.

Meanwhile, calling for a complete overhaul of the factory inspection system, the industry body Confederation of Indian Industry (CII) has said that the excessive number of inspections in India weighs down on the competitive advantage and the ‘ease of doing business’ of Indian businesses. It said that system needs a complete overhaul to bring India among the top 50 countries in terms of ‘ease of doing business’ in the next two years.

The industry body in its white paper titled ‘Inspections and Regulatory Enforcements for Micro Small and Medium Enterprises (MSMEs) in India’ pointed that a manufacturing company in India has to comply with around 70 laws and regulations. It further said that 40 inspectors and government officials visit factories on an average “with the ulterior motive to fleece the company promoters and owners.

The white paper furthers stated that inspections in India have been found to be excessive, duplicate and complicated, imposing significant costs on businesses, especially MSMEs,” the paper noted. While most inspections are selected locally, “without any objective criteria”, inspectors act “over-zealously” and make “extortionist demands from factories,gaming companies leverage the benefits of speed, efficiency aligned with its testing and development goals.

CII while urging the central government to encourage the states to pursue a process for simplification of labour laws and compliance, called for an integrated inspection system and emphasized on need to inculcate a risk-based approach in the inspection system which will rationalise the number of inspections and weed out the redundancy and duplicity.

The CNX Nifty traded in a range of 8,824.30 and 8,774.20. There were 35 stocks advancing against 16 decliners on the index.

The top gainers on Nifty were Indusind Bank up by 2.88%, Aurobindo Pharma up by 2.53%, TCS up by 2.26%, Tata Power up by 2.05% and Ambuja Cements up by 1.98%. On the flip side, Maruti Suzuki down by 1.43%, Bajaj Auto down by 1.23%, Axis Bank down by 1.20%, Hero MotoCorp down by 0.91% and HDFC Bank down by 0.60% were the top losers.The European markets were trading in green; UK’s FTSE 100 increased 89 points or 1.33% to 6,799.28, Germany’s DAX increased 74.58 points or 0.73% to 10,350.75 and France’s CAC increased 59.14 points or 1.37% to 4,391.59.

The Asian markets ended higher on Monday, on hopes of BOJ easing, positive home price data from China and rallying oil prices helped investors shrug off news related to possible terrorist attacks in the United States. The US Federal Open Market Committee's two-day policy meeting ends on Wednesday, with investors likely to focus on the accompanying statement for clues about the future path for interest rates. The Bank of Japan will also wrap up its two-day policy meeting on Wednesday amid speculation it will probably cut the rate on some bank reserves further below zero. Chinese shares ended higher as investors returning from a long holiday drew optimism from surveys showing improving business confidence. An official survey showed that Average new home prices in China's 70 major cities hit a six-month high in August defying government's efforts to rein in soaring home values and deter speculative purchases. Further, Hong Kong shares rose sharply, with property stocks pacing gainers on expectations of continuous money flows from China into Hong Kong stock markets. Japanese markets were closed for a public holiday.