Benchmarks trade slightly in green in late morning session

Indian equity benchmarks continued their lackadaisical trade slightly in green in the late morning session. Concern about the global economy contributed to the early weakness, while value buying at reduced levels after the drop helped the bourses in some recovery. This week has seen brutal cuts on equity markets globally as investors contend with weak China data, weak start to earnings in the US & now almost 70% probability of rate hike by the Federal Reserve. The sentiments got some support after Indian rupee opened higher against the US dollar on increased selling of the American currency by banks and exporters. The retail or CPI inflation touched 13-month low, aided by lower food prices especially those of vegetables. This is the first time in this financial year that the overall CPI-based inflation has fallen below the Reserve Bank of India’s inflation target of 5 percent by March 2017. Investors however maintained cautious on the report that foreign institutional investors were net sellers in equities worth Rs 912 crore on Thursday, as per provisional stock exchange data. Additionally, Infosys, the country’s second largest software exporter has lowered its revenue guidance (constant currency) for FY17. The company cut its FY17 revenue guidance for second time this year to 8-9 percent against 10.5-12 percent forecasted earlier. Dollar revenue guidance was lowered to 7.5-8.5 percent from 10-11.5 percent earlier. Traders were seen piling up positions in Oil & Gas, Capital Goods and PSU stocks, while selling was witnessed in TECK, Consumer Durables and IT sector stocks. In scrip specific development, Shreyas Shipping & Logistics was trading firm as its wholly-owned subsidiary ‘Shreyas Relay Systems’ has decided to sell its stake of 51% in SRS Freight Management to BSL Freight Solutions.

On the global front, Asian shares traded mostly lower, with Shanghai bucking a positive trend after prices data from China gave hopes for renewed demand prospects after disappointing trade data earlier this week. China reported CPI for September with a gain of 0.7% month-on-month, well above the 0.3% pace seen and led by food prices, and a 1.9% increase year-on-year, faster than the 1.6% rise expected. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,550 and 27,600 levels respectively. The market breadth on BSE was positive in the ratio of 1447:690, while 133 scrips remained unchanged.

The BSE Sensex is currently trading at 27684.21, up by 41.10 points or 0.15% after trading in a range of 27548.18 and 27763.54. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.58%, while Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.50%, Capital Goods up by 0.89%, PSU up by 0.80%, Power up by 0.43% and Auto up by 0.35%, while TECK down by 0.48%, Consumer Durables down by 0.47%, IT down by 0.35%, FMCG down by 0.23% and Metal down by 0.23% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.27%, ONGC up by 1.86%, Tata Motors up by 1.64%, Larsen & Toubro up by 1.54% and Reliance Industries up by 1.33%.

On the flip side, Hindustan Unilever down by 2.60%, Infosys down by 1.53%, Lupin down by 1.45%, Bharti Airtel down by 0.99% and HDFC down by 0.44% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has said that the absence of reforms in infrastructure and power sectors by previous government created huge non-performing assets (NPAs) in the core segments. He also said there are various sectors that have been impacted by the global slowdown, but some of these were affected more because of the absence of reforms. 

He further said that their own inability to bring in reforms adequately in infrastructure and power sectors caused the difficulty in banks books.  He added that in the infrastructure sector the main problem is the inability to adequately and quickly settle the disputes. He said that they allowed them to pester for an indefinitely long period and now they have taken various steps including amending laws, setting up faster courts, among others.

Though, accepting that absence of reforms in state discom led to a stress in the power sector, Jaitley stated that the only silver lining is that the causes of the stress in power sector have been analysed quickly and correctly, and now they are addressing those problems. He said that bringing reforms in the country has become easier now than it was some years back.

Jaitley has said that there is a lot of maturity, which has come into the country's political system and this is noticed from the fact that reforming in India now is no longer as challenging as it used to be say 10 or 20 years ago. It can be noted that most of the over Rs 8.5 trillion of dud loans of banks, a large chunk are their exposure to infra and power sectors.

The CNX Nifty is currently trading at 8580.00, up by 6.65 points or 0.08% after trading in a range of 8549.80 and 8600.20. There were 32 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.02%, ONGC up by 1.69%, Larsen & Toubro up by 1.53%, Reliance Industries up by 1.46% and SBI up by 1.22%.

On the flip side, Hindustan Unilever down by 2.71%, Zee Entertainment down by 2.63%, Infosys down by 2.16%, Lupin down by 1.56% and Eicher Motors down by 1.21% were the top losers.

The Asian markets were trading mostly in red; Taiwan Weighted decreased 39.37 points or 0.43% to 9,179.80, Shanghai Composite decreased 14.14 points or 0.46% to 3,047.21, Jakarta Composite decreased 2.71 points or 0.05% to 5,337.69 and FTSE Bursa Malaysia KLCI decreased 2.68 points or 0.16% to 1,662.34.

On the other hand, KOSPI Index increased 9.32 points or 0.46% to 2,024.76, Nikkei 225 increased 85.14 points or 0.51% to 16,859.38 and Hang Seng increased 143.62 points or 0.62% to 23,174.92.