Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued their firm trade in the late morning session on account of buying in frontline blue chip counters. Emergence of buying interest among investors and funds, brokers coupled with a firm trend in other regional markets following an unexpected fall in a US manufacturing index boosted sentiment in domestic market. The sentiments were on optimistic note with private report stating that India’s current account deficit is likely to stay below 1% of GDP this year, largely due to a sharp fall in the trade deficit as against last year. As per the report, the widening of the trade deficit will be watched closely, especially at a time when the services sector receipts and private transfers are under pressure. Indian rupee opened higher against the US dollar on account of selling of American currency by banks and exporters. The weakness in the dollar against other currencies overseas is on unexpected fall in a US manufacturing index which made the rupee stronger. Some support also came after NITI Aayog Vice-Chairman Arvind Panagariya called for building ecosystems to take India on a high-growth trajectory to create wealth and eliminate poverty. Panagariya stated that the liberalization and foreign investment as the few key policies changed the growth dynamics of Indian economy.  Investors will be keeping an eye on the crucial three-day meeting of the all-powerful GST Council, starting today, which will decide on the tax rate and sort out issues like compensation formula for rollout of the new indirect tax regime from April 1, 2017. Traders were seen piling up positions in Realty, Metal and FMCG stocks, while selling was witnessed in Oil & Gas sector stocks. In scrip specific development, Aarti Industries was trading firm after touching a fresh 52-week high after the company said the board has approved buyback of shares at a price of Rs 800 per share via the tender offer route. The board of directors of the company at its meeting held on October 17, 2016 has approved the buyback up to 1.20 million equity shares representing up to 1.44% of the total equity of the company at a price of Rs 800 for an aggregate amount of up to Rs 96 crore on a proportionate basis through the tender offer. Indian Hume Pipe Company was trading firm after the company said it would consider a proposal on October 26 for issuing bonus shares.

On the global front, Asian shares gained in narrow trade ahead of major data from China this week that could confirm some signs of a stronger than expected third quarter in the world’s second largest economy. Investors also noted comments overnight from Fed Vice Chair Stanley Fischer saying the central bank is very close to job and price targets that should trigger a rate hike. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,550 and 27,700 levels respectively. The market breadth on BSE was positive in the ratio of 1631:659, while 135 scrips remained unchanged.

The BSE Sensex is currently trading at 27709.53, up by 179.56 points or 0.65% after trading in a range of 27652.76 and 27781.41. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.76%, while Small cap index was up by 0.76%.

The top gaining sectoral indices on the BSE were Realty up by 1.10%, Metal up by 1.04%, FMCG up by 0.72%, Bankex up by 0.66% and Auto up by 0.59%, while Oil & Gas down by 0.24% was the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.63%, HDFC up by 1.90%, ICICI Bank up by 1.45%, Reliance Industries up by 1.10% and ITC up by 1.06%.
On the flip side, Asian Paints down by 0.89%, ONGC down by 0.34%, Bharti Airtel down by 0.30%, Dr. Reddy’s Lab down by 0.01% and TCS down by 0.01% were the top losers.

Meanwhile, the Cabinet is likely to clear the plan to cut the government’s stake in around 20 Public Sector Undertaking (PSUs) on October 19, including several profit-making entities, restarting equity sale in public sector companies after a 12-year gap.

The companies identified apparently include the profitable Bharat Earth Movers, Certification Engineers International and others such as loss-making Scooters India. Also, there will be a detailed review of the plan to shed 10% stake in public sector general insurance companies, aimed at helping the insurers raise funds to take on private sector players. The aim of the policy is to ensure that these PSUs are run professionally and there is greater value in these entities, paving the way for the government to dilute its stake in the years. 

The government think-tank NITI Aayog that firmed up the disinvestment policy for the government, had suggested strategic sale in several PSUs that would result in bringing down the Centre's share in these entities to under 50%. From a list of 74 loss-making companies identified by NITI Aayog, the government is looking to sell 22 companies, including BPCL, and is going to wind up several others.

The CNX Nifty is currently trading at 8573.80, up by 53.40 points or 0.63% after trading in a range of 8555.90 and 8594.15. There were 40 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.60%, Zee Entertainment up by 2.55%, HDFC up by 1.95%, Aurobindo Pharma up by 1.58% and HCL Tech up by 1.47%.

On the flip side, Bharti Infratel down by 1.24%, BPCL down by 1.11%, Asian Paints down by 0.99%, Idea Cellular down by 0.97% and ONGC down by 0.47% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 5.55 points or 0.27% to 2,033.16, FTSE Bursa Malaysia KLCI increased 7.4 points or 0.45% to 1,661.11, Shanghai Composite increased 14.18 points or 0.47% to 3,055.35, Taiwan Weighted increased 24.45 points or 0.27% to 9,200.67, Jakarta Composite increased 28.93 points or 0.53% to 5,439.23, Nikkei 225 increased 32.69 points or 0.19% to 16,932.81 and Hang Seng increased 301.48 points or 1.31% to 23,339.02.