Benchmarks gyrate around highest point of the day

Indian equity benchmarks continued their firm trade gyrating around highest point of the day in the late morning session on account of buying in front line blue chip counters. A bout of volatility is expected during the day triggered by uncertainty over the outcome of the upcoming US presidential election. Foreign portfolio investors have been steadily paring their bullish derivatives bets on Indian stocks in the run-up to the US elections next week. The sentiments took some support with a survey of Federation of Indian Chambers of Commerce and Industry (FICCI), which has said that India Inc believes the economy is faring better and is optimistic about demand rising. Expectations regarding the performance of the economy in the next six months went up, with about 75% positive on growth, up from 66%. Some support also came with a survey which showed that Indian services activity accelerated rapidly in October as broadly steady prices helped drive a surge in domestic and foreign demand. The Nikkei/Markit Services Purchasing Managers’ Index jumped to 54.5 in October from 52.0 in September. It has only been higher once - in August - since January 2013 and marked its 16th month above the 50 level that separates growth from contraction. A sub index measuring new business climbed to 54.3 in October from 52.1, its second highest in over two years, although optimism cooled to a four-month low, suggesting a slowdown is possible after the annual festive season between October-December.

Investors however maintained cautious approach as global ratings agency Standard & Poor’s (S&P) reiterated its sovereign rating and outlook on India but ruled out any upgrade for this year and the next, citing weak public finances. The government slammed S&P’s statement saying there was disconnect between rating agencies views and investor perception on India. Economic Affairs Secretary Shaktikanta Das stated that the reforms undertaken by Asia’s third largest economy were unparalleled in any major economy. Das cited various steps taken by the government in the past two years, including building strong external position, controlling inflation and structural reforms such as the goods and services tax and bankruptcy code, saying that globally investors recognize these. With barely a fortnight left for Parliament’s Winter Session, the GST Council will begin its crucial two-day meeting today to decide on tax rate, including the levy of cess and sort out the vexed issue of jurisdiction over assesses. The meeting also assumes significance as it comes at a time when an industry report has pointed out sharp anomalies in the taxation rates and structure across different industries such as telecom, tobacco, textiles, food processing and tourism.

Traders were seen piling positions in Metal, Capital Goods and Consumer Durables stocks, while selling was witnessed in Oil & Gas, PSU and IT sector stocks. In scrip specific development, Indo Amines is locked at upper circuit limit on receiving approval from United States Environmental Protection Agency to sell it 10 chemical products in the United States market. On the global front, Asian shares were trading on a mixed note on jitters over the US presidential election. A Trump victory could trigger financial market volatility given investor worries about his stance on trade, immigration and foreign policy. Trump has also accused the Fed of keeping rates low because of pressure from the Obama administration. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,500 and 27,500 levels respectively. The market breadth on BSE was positive in the ratio of 1777:648, while 94 scrips remained unchanged.

The BSE Sensex is currently trading at 27573.90, up by 46.68 points or 0.17% after trading in a range of 27446.31 and 27588.65. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.32%, while Small cap index was up by 0.62%.

The top gaining sectoral indices on the BSE were Metal up by 1.48%, Capital Goods up by 0.77%, Consumer Durables up by 0.57%, Auto up by 0.51% and Realty up by 0.39%, while Oil & Gas down by 0.72%, PSU down by 0.18% and IT down by 0.02% were the losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.83%, Tata Steel up by 0.93%, Larsen & Toubro up by 0.91%, ICICI Bank up by 0.72% and TCS up by 0.72%.

On the flip side, ONGC down by 2.63%, Sun Pharma down by 1.08%, Asian Paints down by 0.84%, Mahindra & Mahindra down by 0.79% and NTPC down by 0.70% were the top losers.

Meanwhile, global rating agency, Standard and Poor's (S&P) has affirmed India’s sovereign rating for long term at 'BBB-' and short term at 'A-3' with stable outlook and ruled out any upgrade in two years, citing weak public finances. Ratings agency said that the stable outlook balances India's sound external position and inclusive policymaking tradition against the vulnerabilities stemming from its low per capita income and weak public finances. Further, outlook indicates that the agency does not expect to change its rating assigned to India this year or next, based on their current set of forecast.

According to the S&P, the upward pressure on the credit ratings could emerge if the government reforms markedly improve India's fiscal performance and pushes down the level of net general government debt below 60% of the gross domestic product (GDP). Currently, government debt amounts to about 69% of the GDP. Further, improvements in policymaking continue to strengthen and flagged wide fiscal deficits, a heavy debt burden and low per capita income as concerns.

On other hand, it said that downward pressure on the ratings could re-emerge if growth disappoints as a result of stalling reforms or if interest rate-setting monetary policy committee (MPC) does not achieve inflation targets. It added that a higher-than-expected deterioration in the nation's external liquidity position could also put downward pressure on ratings. The rating agency is expecting India's economy to grow 7.9% in 2016 with current account deficit (CAD) at 1.4% of the gross domestic product (GDP). It is also expecting that the Reserve Bank of India (RBI) would meet its inflation target of 5% by March 2017. Earlier, in September 2014, it had upgraded India's rating to stable from negative.

The ratings agency also said that India's external position remains a credit strength and it has a floating exchange rate and limited reliance on external savings to fund the growth. Besides, the authorities also maintain contingent financing facilities of $68 billion through bilateral swaps and contingency reserve arrangements. The ‘BBB-’ rating indicates lowest investment grade rating.

The CNX Nifty is currently trading at 8531.65, up by 17.65 points or 0.21% after trading in a range of 8489.60 and 8536.25. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 5.53%, Bharti Infratel up by 3.19%, BHEL up by 2.12%, ACC up by 1.89% and Hero MotoCorp up by 1.63%.

On the flip side, ONGC down by 2.58%, BPCL down by 1.57%, Grasim Industries down by 0.97%, NTPC down by 0.93% and Asian Paints down by 0.91% were the top losers.

The Asian markets were trading mixed; KOSPI Index increased 8.38 points or 0.42% to 1,987.32, Hang Seng increased 20.56 points or 0.09% to 22,831.06 and Shanghai Composite increased 26.32 points or 0.85% to 3,129.05.

On the other hand, Taiwan Weighted decreased 51.38 points or 0.56% to 9,087.66, Jakarta Composite decreased 20.77 points or 0.38% to 5,384.68 and FTSE Bursa Malaysia KLCI decreased 4.67 points or 0.28% to 1,654.93.

Japan Stock Exchange was closed on account of ‘Culture Day’ holiday.