Post Session: Quick Review

Indian equity benchmarks showed a lackluster trade and moved in a narrow range to end the session slightly in green. Today’s trade was accompanied by low volumes as traders refrained from taking heavy position on account of holiday truncated week. The markets will remain closed on Tuesday and Wednesday -- October 11, 2016 and October 12, 2016 on account of National holiday. The benchmarks started the trade in green in early deals with NITI Aayog Vice-Chairman Arvind Panagariya’s statement that India can become a $10 trillion economy in the next 15 years, from the existing $2 trillion, like China did in last one and a half decade. The rupee rose against the US dollar in early trade at the forex market on increased selling of the American currency by banks and exporters. Besides, sustained foreign fund inflows, weakness of the dollar against other currencies overseas after last week’s softer-than-forecast US jobs data, and a higher opening in the domestic equity market boosted the rupee value against the dollar. Some support also came on reports that investments into domestic capital markets through participatory notes (P-Notes) rose to the highest level in five months at Rs 2.16 lakh crore in August. According to SEBI data, the total value of P-Notes investment in Indian markets -- equity, debt and derivatives -- increased to Rs 2,16,232 crore in August, from Rs 2,12,179 crore in July. Separately, credit rating agency CRISIL in its latest report said that revenues of companies in key sectors such as automobiles, IT services, power, steel products, telecom services, pharmaceuticals and FMCG are expected to grow 7% in the July-September 2016 quarter, compared with a marginal 2% in the year ago period. However, investors were cautious as the World Bank in a new report has said that India, the world’s largest remittance recipient in 2015, may receive a remittance of $65.5 billion this year, a drop of 5% due to weak economic growth in remittances-source countries and cyclic low oil prices. Investors have started eyeing the macro data scheduled to be announced through the week starting with factory output numbers later in the day. Currency fluctuations globally and change in oil price movement would also be keenly watched. With the US election less than a month away, the street expects less chance of a victory by Republican nominee Donald Trump in his US presidential bid. A second debate with Democrat Hillary Clinton came and went with little immediate impact on investor thinking.

On the global front, Asian markets ended mixed, while China’s yuan fell to its lowest level in six years, breaching a key psychological threshold, before erasing the losses on the first day of trading after a week-long holiday. Japan’s Governor Haruhiko Kuroda stated that a further cut to the Bank of Japan’s short-term interest rate is possible or its new yield curve target rates if needed. European stocks rebounded paring off its losses, while investors remained cautious following Friday’s downbeat US jobs data and as oil prices moved back lower.

Back home, telecom stocks Bharti Airtel and Idea Cellular were in red after Reliance Industries’ (RIL) telecom arm - Reliance Jio Infocomm (Jio) informed that it has created a world record by crossing 16 million subscribers in its first month of operations (September, 2016). However, Reliance Communications was in green as it is in advanced stages to complete the sale of its tower arm to private equity investor Brookfield Asset Management. Certain stocks related to gold jewellery companies were in green on expectation of strong demand on account of recent slump in gold prices and ahead of festive season.

The BSE Sensex ended at 28094.09, up by 32.95 points or 0.12% after trading in a range of 28068.32 and 28216.64. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.24%, while Small cap index was up by 0.26%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.57%, Metal up by 1.56%, IT up by 1.11%, TECK up by 0.87% and FMCG up by 0.05%, while Realty down by 1.03%, Oil & Gas down by 0.61%, Capital Goods down by 0.25%, PSU down by 0.24% and Power down by 0.22% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 2.97%, Asian Paints up by 2.14%, Cipla up by 1.83%, Infosys up by 1.72% and Lupin up by 1.15%. (Provisional)

On the flip side, Reliance Industries down by 1.44%, Adani Ports & Special Economic Zone down by 1.14%, NTPC down by 1.11%, Bharti Airtel down by 1.08% and HDFC down by 0.81% were the top losers. (Provisional)

Meanwhile, credit rating agency Crisil in its latest report on “Corporate Profitability: Review and Outlook” has said that due to the improvement in urban and rural consumption and falling global commodity prices, the profits of companies in the key sector such as automobiles, IT services, power, steel products, telecom services, pharmaceuticals and FMCG are likely to grow 7 per cent in the July-September quarter, as compared to the a marginal 2 per cent in the year ago period.

This will be the second best revenue growth in the last six quarters mainly on the back of low-base effect (revenue growth in the corresponding quarter last fiscal was stagnant), improvement in urban and rural consumption, and low commodity prices, though the report excludes banking, financial services and insurance (BFSI) and oil companies.

As per the report, during the April-June quarter (Q1FY17), India Inc. reported 5 per cent year-on-year revenue growth, compared with stable revenue in the Q1 of FY16. Crisil estimates a 50 bps increase in operating margin (operating profit/ net sales) in the July-September quarter at 19.8 per cent, from 19.3 per cent in the year ago quarter. During the second quarter, automobile, steel products, telecom services and FMCG (fast moving consumer goods) firms are expected to record better operating margin compared with last year. On the other hand, firms in the IT services, power and pharmaceuticals are likely to witness a contraction in operating margin.

Rating agency sees automobile companies reporting 13 per cent growth on the back of new launches and healthy rural demand following a good monsoon. Retail is expected to grow 12 per cent on the back of improvement in disposable incomes and India’s economic outlook, while pharmaceuticals, driven by new launches in the US, is likely to see 13 per cent growth. IT services sector is expected to grow 10 per cent, slower than in the past, aided by volume and rupee depreciation. Consumer discretionary sectors such as airlines, cars and two-wheelers and retail are expected to grow faster than industry because of improved volumes.

The CNX Nifty ended at 8714.60, up by 17.00 points or 0.20% after trading in a range of 8703.95 and 8745.80. There were 27 stocks advancing against 24 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 3.19%, ACC up by 2.56%, Asian Paints up by 2.19%, Cipla up by 1.99% and Hindalco up by 1.93%. (Provisional)

On the flip side, Bharti Airtel down by 1.22%, Reliance Industries down by 1.12%, Adani Ports & Special Economic Zone down by 1.07%, NTPC down by 1.05% and Grasim Industries down by 0.97% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 9.37 points or 0.13% to 7,053.76, Germany’s DAX increased 24.9 points or 0.24% to 10,515.76 and France’s CAC increased 3.92 points or 0.09% to 4,453.83.

The Asian markets made a mixed closing on Monday, as oil prices retreated on doubts over oil producers reaching a meaningful output cut deal, which brought some speculators to unwind bullish bets. However, losses across the region remained capped somewhat after Friday's weaker non-farm payrolls report reinforced expectations that the Federal Reserve will not raise short-term interest rates at its November policy meeting. US non-farm payroll employment climbed by 156,000 jobs in September compared to estimates for an increase of about 176,000 jobs. The unemployment rate rose to 5 percent from 4.9 percent. Chinese shares ended higher as investors returned from a week-long holiday, even as property developers tumbled amid fresh curbs on property purchases.  Markets in Japan, Hong Kong and Taiwan were closed for public holidays.