Indian equity indices settle with modest gain

Indian equity bourses commenced the fresh week on a positive note as gains in select financials helped offset losses in IT majors, amid firm European cues. Sentiments remained up-beat for the markets with Prime Minister Narendra Modi’s statement that the Goods and Services Tax law will boost domestic demand, create more opportunities for domestic business and drive job creation. He also said that India is the fastest growing major economy and one of the most attractive destinations for FDI. Investors also got some confidence with the Union Minister Arjun Ram Meghwal’s statement that country’s economy will grow 8 percent this fiscal, while agricultural growth is expected to be over 4 percent. However, gains remained capped with the report that Private equity investments declined 53 percent to touch $2.5 billion during July-September this year, lowest in the last nine quarters, largely owing to absence of big ticket deals. According to the report, there were 241 PE transactions worth $2,538 million in the September quarter this year, while there were 303 deals worth $5,446 million in the corresponding period last year. Meanwhile, Aviation stocks came under pressure after the report that DGCA and BCAS are all set to get powers to impose fines on violators, with the government preparing to amend the legislation in this regard. Currently, there is no provision for levying penalties. Further, telecom majors like Bharti Airtel slipped after the report that India's telecoms regulator recommended the top three network operators be fined a combined Rs 30.5 billion ($455 million), saying they were denying new entrant Reliance Jio sufficient interconnection points. Airtel and Vodafone India were fined for 21 zones each, while Idea was fined for 19 zones.

On the global front, Asian markets ended higher on Monday as better than expected data from Japan and hopes that Beijing will speed up structural reforms at state-owned enterprises, boosted investor sentiments. Japan reported that its trade balance swung to a surplus in September coupled with strong Japanese manufacturing data from a purchasing manager’s survey also suggested signs of improved activity in the world's third biggest economy. However, Oil prices fell on Monday as Iraq said it wanted to be exempt from any deal by producer cartel OPEC to cut production to prop up the market, and as US drillers stepped up work. Meanwhile, European markets started the week in a buoyant mood, as equities rose on earnings, bonds jumped on a brightening credit outlook and economic data exceeded investors estimates.

Back home, the local benchmarks got off to a positive opening following supportive leads from Asian markets, were sentiments remained optimistic in thin trades triggered by encouraging economic data from Japan. However, the indices failed to capitalize on the initial momentum and see-sawed around the neutral line in a very tight band throughout morning trade as investors remained sideways in the absence of any significant trigger at domestic front, however hefty buying at several counters got triggered after strong opening of European markets. Thereafter, the indices touched the high point of the day in the late hours of trade but could not manage to hold on the impetus and drifted to eventually settle with modest gains. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by over two tens of a percent to settle above the crucial 8,700 support level, while Bombay Stock Exchange’s sensitive Index-Sensex accumulated over hundred points and closed above the psychological 28,100 mark. Going forward, market sentiment will be dictated by investment trend of overseas investors, movement of the rupee and crude oil prices. Foreign portfolio investors (FPIs) sold shares worth a net Rs 272.91 crore on October 21, 2016 as per provisional data released by the stock exchanges. Also, the frontline Indices may experience some volatility amid derivatives expiry due on Thursday.

The market breadth remained optimistic as there were 1685 shares on the gaining side against 1164 shares on the losing side, while 225 shares remained unchanged.

Finally, the BSE Sensex gained 101.90 points or 0.36% to 28179.08, while the CNX Nifty rose 15.90 points or 0.18% to 8,708.95. 

The BSE Sensex touched a high and a low of 28256.65 and 28075.95, respectively and there were 14 stocks on gainers side against 16 stocks on the losers side on the index. The broader indices made mixed closing; the BSE Mid cap index ended lower by 0.13%, while Small cap index was up by 0.52%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.67%, PSU up by 1.54%, Auto up by 0.84%, Bankex up by 0.60% and Metal up by 0.20%, while IT down by 0.96%, TECK down by 0.94%, Capital Goods down by 0.67% and Consumer Durables down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 4.61%, Tata Motors up by 2.67%, ICICI Bank up by 2.47%, Coal India up by 2.46% and Lupin up by 2.05%. On the flip side, Wipro down by 3.09%, Asian Paints down by 2.25%, Larsen & Toubro down by 1.06%, Axis Bank down by 1.01% and Bharti Airtel down by 0.94% were the top losers.

Meanwhile, Telecom Regulatory Authority of India (Trai) has suggested imposing Rs 3,050 crore penalty on Bharti Airtel, Vodafone and Idea, for allegedly denying inter-connectivity to newcomer Reliance Jio. The regulator has also recommended the Department of Telecommunications (DoT) to take action against these three telecom operators.

Noting that denial of interconnection by these operators to RJio appears to be with the ulterior motive to stifle competition and is anti-consumer, it said that it has found the trio to be non-compliant with licence conditions and service quality norms given the high rate of call failures and congestion at interconnect points for RJio.

Trai has recommended a penalty of Rs 50 crore per circle for 21 service areas, except Jammu & Kashmir, for Airtel and Vodafone, where the point of interconnect (PoI) congestion exceeded the permissible limit of 0.5 per cent. For Idea Cellular, the penalty has been suggested for 19 circles, except Himachal Pradesh, J&K and North East. The penalty for Airtel and Vodafone works out to about Rs 1,050 crore each, while in case of Idea Cellular it is about Rs 950 crore. Since, Trai does not have powers to levy fines; it has recommended the DoT to levy the same in its capacity as the licensor since these companies have violated their licence conditions.

Trai has recommended that DoT take action against each of the three carriers, saying that violation of licence norms warranted revocation of their permits.  The DoT now needs to decide on the next course of action. If DoT finds violations in all the circles, as mentioned by Trai, the telcos would have to cough up a combined penalty of Rs 3,050 crore.  Since September 30, Trai has been monitoring congestion levels on a daily basis and found that the situation has not improved.

The CNX Nifty traded in a range of 8,736.95 and 8,684.15. There were 24 stocks in green against 27 stocks in red on the index.

The top gainers on Nifty were ONGC up by 4.54%, BPCL up by 2.90%, Coal India up by 2.62%, ICICI Bank up by 2.56% and Tata Motors up by 2.53%. On the flip side, Idea Cellular down by 3.50%, Wipro down by 3.02%, HCL Tech down by 2.49%, Asian Paints down by 2.04% and Zee Entertainment down by 1.75% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 3.49 points or 0.05% to 7,023.96, Germany’s DAX increased 94.38 points or 0.88% to 10,805.11 and France’s CAC increased 37.68 points or 0.83% to 4,573.75.

Asian stocks ended in green on Monday as some encouraging data out of Japan and hopes that Beijing will speed up structural reforms at state-owned enterprises, boosted investor sentiment. Japan reported that its trade balance swung to a surplus in September coupled with strong Japanese manufacturing data from a purchasing manager’s survey also suggested signs of improved activity in the world's third biggest economy. Chinese shares rallied amid expectations that the government would maintain its high levels of fiscal spending. The yuan weakened further to hit fresh six-year lows against the dollar amid evidence of ongoing outflows from the world's second-largest economy. Further, Hong Kong's shares ended higher as trading resumed following a holiday on Friday owing to a typhoon. However, a retreat in oil prices in Asian deals served to keep a lid on overall gains across the region.