Local markets settle with decent gains; Sensex ends above 28100 mark

A session after displaying consolidation, Indian benchmark indices ended higher on Thursday, on account of buying in frontline blue-chip stocks. Sentiments remained jubilant in the first half of trade amid firm cues from Asia and overnight gains on Wall Street, but investors started booking profits after weak opening in European counterparts. Investors got some confidence 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.  However, gains remained capped as the GST Council’s third round of deliberations ended without a decision on the rates structure after most States objected to a proposal to levy an additional cess on demerit goods.  The GST Council will meet again on November 3-4 to take decision on the Goods and Services Tax rates, which will have four slabs. 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 has said that 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. 

On the global front, Asian markets ended mostly in green on Thursday, as oil and gas exploration companies gained on higher oil prices. Oil traded near a 15-month high after an unexpected drop in American stockpiles. 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. 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. Meanwhile, European markets trading mixed, as a clutch of profit warnings from companies throughout the region took their toll on the market.

Back home, the local benchmarks got off to a positive start in the early trade as investors were largely influenced by the supportive leads from Wall Street overnight and a fairly steady trend in Asian markets.  Thereafter, the key indices soon capitalized on the momentum and touched intraday highs in late morning session but they failed to hold onto the highs and receded to lows in noon trades post weak European market opening. Yet, final hour buying ensured that the key indices do not shut shops way below the intraday highs. Eventually, the NSE’s 50-share broadly followed index Nifty, rose by close to half percent to settle below the crucial 8,700 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated close to one hundred and fifty points and closed above the psychological 28,100 mark. The broader markets failed to show any kind of fervor and settled on an uninspiring note, underperforming their larger peers by small margin. On the BSE sectoral space, Banking counter remained the top gainer in the space with around one and half a percent gains followed by the high beta- Metal index which ended with similar gains on 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. On the other hand, the IT index slipped by quarter a percent followed by FMCG and Auto counters which settled with diminutive losses.

The market breadth remained optimistic as there were 1600 shares on the gaining side against 1223 shares on the losing side, while 225 shares remained unchanged. Finally, the BSE Sensex gained by 145.47 points or 0.52% to 28129.84, while the CNX Nifty rose 40.30 points or 0.47% to 8,699.40.

The BSE Sensex touched a high and a low of 28212.50 and 28031.57, respectively and there were 17 stocks on gainers side against 13 stocks on the losers side on the index. The broader indices made a positive closing; the BSE Mid cap index ended higher by 0.06%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Bankex up by 1.42%, Metal up by 1.36%, Realty up by 0.98%, Consumer Durables up by 0.65% and PSU up by 0.65%, while IT down by 0.25%, FMCG down by 0.10% and Auto down by 0.04% were the few losing indices on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 5.10%, ICICI Bank up by 4.72%, SBI up by 2.02%, HDFC up by 1.26% and Larsen & Toubro up by 1.23%. On the flip side, Lupin down by 0.68%, Hindustan Unilever down by 0.64%, Tata Motors down by 0.54%, Sun Pharma Inds. down by 0.49% and Infosys down by 0.45% were the top losers.

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 traded in a range of 8,727.00 and 8,678.30. There were 29 stocks in green against 22 stocks in red on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 5.01%, ICICI Bank up by 4.70%, Hindalco up by 2.95%, Bharti Infratel up by 2.47% and Idea Cellular up by 2.36%. 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 0.68% and Tata Motors down by 0.61% were the top losers.

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.