Indian benchmarks settle with paltry gain; broader markets outclass

Indian stock market ended on a positive note as investors remained optimistic on hopes of further rate cuts by the central bank after data showed that inflation based on consumer price index dipped to 13-month low in September. Data released by the statistics office showed consumer inflation at 4.31% in September compared with 5.05% in August and 6.07% in July. The decline was due to a steep drop in food inflation to 3.88% in September from 5.91% in August. The data raises hopes of more rate cuts as the outlook for inflation is benign for about six months and there’s good chance consumer inflation will stay below RBI’s 5% target for March 2017. Adding to the confidence among market participants, India’s Wholesale Price Index (WPI) in the month of September 2016 also softened to 3.57 percent compared to 3.74 per cent in the previous month. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. The rupee was strong against the US dollar by 20 paise at 66.74 at the time of equity markets closing as compared to its previous close of 66.94. Meanwhile, result session of Q2FY17 has started on mixed note as TCS reported better than expected profit, but its revenue growth remained a drag, while Infosys posted strong set of number, but cut its financial-year revenue growth target for the second time in three months on an uncertain business outlook. Banking stocks edged higher after the central bank allowed banks to classify government securities borrowed from the central bank in the daily liquidity adjustment facility (LAF) under the statutory liquidity ratio (SLR), making liquidity management for banks easier, while Cement stocks surged on the report that cement demand in the country is expected to touch 8 per cent in financial year (FY) 2017-18, helped by government's push to the infrastructure sector.

On the global front, Asian markets ended mostly higher on Friday as stronger-than-expected Chinese inflation data eased some concerns about the health of the world's second-biggest economy. September producer prices in China unexpectedly rose for the first time in nearly five years, while consumer inflation also beat expectations, setting the tone for equity markets globally. The producer price increase will be good news for Beijing as it struggles to reduce a mountain of corporate debt. Japan's Nikkei received a boost from a relatively weaker Japanese yen, while Thailand’s stock market opened sharply higher, rebounding from losses this week leading up to the death of King Bhumibol Adulyadej, and was Asia’s best performing equities market by a wide margin. Meanwhile, European shares rose in early trade, with mining and telecoms stocks outperformance.

Back home, after getting cautious start, the local benchmarks were traded in tight range, altering between positive and negative territory, throughout the session as investors remained cautious over the ongoing quarterly earnings season. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by over one tenth of a percent to settle below the crucial 8,600 support level, while Bombay Stock Exchange’s sensitive Index-Sensex accumulated over thirty points and closed above the psychological 27,650 mark. Moreover, broader markets managed a touch better than the larger peers as the BSE’s midcap and smallcap indices settled with gains of 0.81% and 0.83% respectively.

The market breadth remained optimistic as there were 1735 shares on the gaining side against 1060 shares on the losing side, while 178 shares remained unchanged.

Finally, the BSE Sensex gained by 30.49 points or 0.11% to 27673.60, while the CNX Nifty rose 10.05  points or 0.12% to 8,583.40. 

The BSE Sensex touched a high and a low of 27763.54 and 27548.18, respectively and there were 6 stocks on gainers side against 24 stocks on the losers side on the index. The broader indices made a positive closing; the BSE Mid cap index ended higher by 0.81%, while Small cap index was up by 0.83%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.20%, Capital Goods up by 1.56%, PSU up by 0.85%, Realty up by 0.79% and Power up by 0.75%, while TECK down by 0.73%, Metal down by 0.52% and IT down by 0.50% were the few losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 4.05%, Larsen & Toubro up by 2.51%, Tata Motors up by 2.05%, Reliance Industries up by 1.94% and Power Grid up by 1.69%. On the flip side, Infosys down by 2.34%, Hindustan Unilever down by 2.32%, HDFC down by 1.44%, Lupin down by 1.09% and Mahindra & Mahindra down by 0.88% were the top losers.

Meanwhile, declining for second straight month, annual rate of inflation, based on the consumer prices index (CPI), eased in the month of September at 4.31% as compared to 5.05% in August, mainly on account of a sharp fall in food prices especially those of vegetables. The figure was better than street expectation of 4.53%. 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% by March 2017. CPI inflation for urban sector was 3.64% in September, while for rural segment it was 4.96%.

As per the data released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, on Base 2012=100, index value for CPI (General) for Rural was 133.3, for Urban was 128.0 and for combined stood at 130.8 for the month of September. Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined for September 2016 stood at 4.43%, 2.88% and 3.88% respectively compared to 4.05%, 3.45% and 3.88% in the month of September 2015.

Food inflation slowed to 3.88% in September from 5.91% in August as prices of vegetables and pulses fell. Inflation in vegetable segment was in the negative, contracted by 7.21 percent. Similarly, the pulses prices were subdued last month as also of egg and milk (and its products). Inflation in case of meat and fish basket was 5.83 percent in September, marginally down over the previous month. However, fruits became dearer in last month over the previous months.

The CNX Nifty traded in a range of 8,604.45 and 8,549.80. There were 29 stocks in green against 22 stocks in red on the index.

The top gainers on Nifty were GAIL India up by 3.93%, Larsen & Toubro up by 2.50%, Tata Motors - DVR up by 2.25%, Tata Motors up by 2.23% and Reliance Industries up by 2.04%. On the flip side, Zee Entertainment down by 3.62%, Bharti Infratel down by 2.63%, Infosys down by 2.56%, Hindustan Unilever down by 2.09% and Eicher Motors down by 1.74% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 56.34 points or 0.81% to 7,034.08, Germany’s DAX increased 178.69 points or 1.72% to 10,592.76 and France’s CAC increased 82.04 points or 1.86% to 4,487.21.

The Asian markets ended mostly in green on Friday, reversing some early losses, as investors weighed price increases in China and the possibility of a US interest rate hike later in the year. Asian shares received a boost from a relatively weaker Japanese yen against the dollar. Japan equities ended higher as gains in the Chemical, Petroleum & Plastic, Mining and Communication sectors propelled shares higher. Meanwhile, China stock ended little changed as investors wrestled with mixed economic reports ahead of third-quarter GDP data next week that will shed more light on the health of the economy. Trade data on Thursday showed exports fell more than expected in September while imports unexpectedly shrank, raising doubts about whether recent stabilization in the economy may be short-lived. Inflation data on Friday, however, showed producer and consumer prices had picked up.