Post Session: Quick Review

India equity benchmarks traded in a tight band and ended the session with a gain of around half percent. Investors piled hefty positions in frontline blue chip counters amid positive global cues. The benchmarks made a gap-up opening and traded jubilantly in early deals with Prime Minister Narendra Modi’s statement that India was the fastest growing economy and that it can play a major role in providing strength to global economy that is facing slowdown. Investors maintained a cautious approach as the GST Council meet to reach a consensus on the GST rate structure ended without a decision on Wednesday. Most states objected the proposal to levy an additional cess on demerit goods and the council would now meet on November 3 and 4. Finance minister Arun Jaitley however sounded confident about rolling out the proposed goods and services tax from next April even after a meeting between him and state finance ministers failed to break a deadlock on rates. Meanwhile, Moody’s Investors Service said PPP model in India’s infrastructure needs to be developed further to attract more private investment in the sector that would help propel growth. While the country’s PPP mechanism has seen reasonable success in some sectors over the last 20 years, the level of activity has been low in the last four fiscal years due to challenges. Acknowledging that India’s manufacturing sector is in trouble, Union Minister Anant Geete exhorted companies to counter the challenge posed by the growing Chinese clout by selling products at globally competitive prices.

On the global front, Asian markets ended mostly in red, while China stocks barely moved as investors weighed the implications of a slew of economic data released this week. European markets were mostly in green, while UK shares slipped as a clutch of profit warnings from companies throughout the region took their toll on the market. Investors are focused on whether ECB President Mario Draghi will give any indication of, if and when the central bank may begin tapering its bond purchase programme.

Back home, buying traction was witnessed in Gems & Jewellery stocks like Gitanjali Gems, Thangamayil Jewellery, Rajesh Export, PC Jewellery, Tara Jewels, Shrenuj & Company and Asian Star Company after Commerce and Industry Minister Nirmala Sitharaman said that government will extend full support to the gems and jewellery exports as it is recording healthy growth at a time when outbound shipments are facing challenges. Metal stocks gained traction with the report that the government is working on a new steel policy in a bid to steer the over $100 billion industry out of the rut and ensure that the growth is evenly spread across all the related sectors.

The BSE Sensex ended at 28126.37, up by 142.00 points or 0.51% after trading in a range of 28031.57 and 28212.50. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.03%, while Small cap index was up by 0.46%. (Provisional)

The top gaining sectoral indices on the BSE were Bankex up by 1.38%, Metal up by 1.28%, Realty up by 0.93%, PSU up by 0.69% and Consumer Durables up by 0.68%, while IT down by 0.27%, FMCG down by 0.21% and Auto down by 0.05% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 5.23%, ICICI Bank up by 4.66%, SBI up by 2.14%, HDFC up by 1.41% and Larsen & Toubro up by 1.27%. (Provisional)

On the flip side, Lupin down by 0.73%, Hindustan Unilever down by 0.62%, ITC down by 0.56%, Tata Motors down by 0.55% and Sun Pharma down by 0.52% were the top losers. (Provisional)

Meanwhile, Moody’s Investor Service in its latest report titled ‘Indian Infrastructure: Enhancement of PPP Framework Would Help Meet India's Infrastructure Needs’ has said that enhancement of India's public-private partnership (PPP) model could help attract more private sector investment towards infrastructure projects, and thus help address the country's very large infrastructure needs. It said that historical underinvestment and rapid economic growth are straining India's existing infrastructure. While the country's PPP model has seen reasonable success in some sectors over the last 20 years, PPP activity has been low in the last four fiscal years due to challenges with the PPP model. As such, India's PPP framework will benefit if it is developed further to address key issues regarding improved risk allocation, the ability to renegotiate unpredictable factors in the bid documents, and a move away from project awards based on one metric such as estimated revenues.

The report stated that there has been a large decline in private investment in PPP projects in recent years for a number of reasons, including delays in project approvals and land purchases by the government, complicated dispute resolution mechanisms in the concession agreements, and lower than expected revenues due to aggressive assumptions. Further, delays in project completion have resulted in cost overruns and revenue losses to private concession owners. These factors have impacted the financial viability of some projects and their ability to service debt.

According to Moody’s, more developed PPP markets such as the UK, Canada and Australia use both availability-payment and demand risk models and relatively standardized bid documents - features that could address some of the bottlenecks faced by the Indian framework. In particular, these more developed PPP markets typically feature well-developed regulatory frameworks, largely standardized project contracts, a large and sophisticated investor base and predictable project pipelines.

Moody's further said that the poor performance of some infrastructure projects, including PPP, has been a source of stress for both developers and the Indian banking system. As per the Reserve Bank of India’s June 2016 Financial Stability Report (FSR) report infrastructure, which accounted for 14.2% of total advances of the banking sector, accounted for 34.4% of restructured standard advances and 13.9% of gross non-performing assets of commercial banks in India. It also said that India's economy is set to grow at the fastest pace among major economies in 2016 and 2017, although Gross Domestic Product (GDP) growth remains constrained by various factors, including inadequate infrastructure investments.

The CNX Nifty ended at 8700.20, up by 41.10 points or 0.47% after trading in a range of 8678.30 and 8727.00. There were 30 stocks advancing against 21 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports & Special Economic Zone up by 5.28%, ICICI Bank up by 4.72%, Hindalco up by 2.95%, Bharti Infratel up by 2.47% and Idea Cellular up by 2.36%. (Provisional)

On the flip side, HCL Tech down by 1.70%, Tata Motors - DVR down by 0.79%, Hindustan Unilever down by 0.69%, Sun Pharma down by 0.69% and Tata Motors down by 0.59% were the top losers. (Provisional)

The European markets were trading mostly in green; Germany’s DAX increased 27.2 points or 0.26% to 10,672.88, France’s CAC increased 11.15 points or 0.25% to 4,531.45, while UK’s FTSE 100 decreased 4.63 points or 0.07% to 7,017.29.

Asian stocks ended mostly in red on Thursday as oil prices fell slightly in Asian deals after sharp gains overnight, but a weaker yen and hopes that the European Central Bank will extend its QE program supported some underlying sentiment. Chinese stocks ended on a flat note as investors took stock of a slew of key data released this week, including strong-than-expected loan growth in September, and third-quarter economic growth of 6.7 percent, which was in line with expectations. Meanwhile, Japanese shares ended higher, taking cues from rising US stocks, as investors priced in the outcome of the final US presidential election debate, which a snap poll suggested was won by Democratic candidate Hillary Clinton.