Firm trade prevails in late morning session

Indian equity benchmarks continued their firm trade in the late morning session on account of positive macro-economic data. The rupee appreciated against the US dollar on account of some selling of the American currency by bank and exporters. Retail inflation on the back of easing food and fuel prices eased to 14-month low of 4.20 percent in October this year, strengthening the case for RBI rate cut next month. The easing inflation prompted industry chamber FICCI to demand reduction in interest rate to support investor as well as consumer sentiment. Industry demand for rate cut comes after data showed that factory output in the April-September period declined by 0.1% compared to 4% growth in the year-ago period. The all-powerful Monetary Policy Committee headed by RBI Governor Urjit Patel last month cut benchmark interest rates by 0.25% to 6.25%. The next RBI policy review is on December 7. Separately, exports continued to grow for the second month in a row, expanding by 9.59 percent to $ 23.51 billion in October on healthy growth in shipments of jewellery and engineering products. Though, imports too increased by 8.11 percent to $ 33.67 billion, leaving a trade deficit of $ 10.16 billion in the month under review.

Investors will be keeping an eye on Parliament winter session which begins from today. The Centre has lined up three key Goods and Service Tax (GST) Bills for approval to roll out the new tax from April 1 next year even as the demonetisation move threatens to swamp the winter session of Parliament. Parliament would meet for 22 sittings between November 16 and December 16. The legislative agenda included nine Bills for introduction and approval, 10 pending Bills for passing. Two Bills are listed for withdrawal. Investors are also trying to gauge the impact on company profits after Modi's surprise recall of high-value currency notes last week. At risk is a strengthening earnings picture that has seen three quarters of gains, after operating profit fell in every quarter of 2015. Traders were seen piling up positions in IT, TECK and Auto stocks, while selling was witnessed in Consumer Durables, Metal and Capital Goods sector stocks.

On the global front, Asian shares were trading mostly in green, tracking a rally in Wall Street shares as the sell-off in global bonds and sharp gains in the dollar paused for now. Investors are awaiting remarks by Fed Chair Janet Yellen this week with market views widely expecting a rate hike in December. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,100 and 26,400 levels respectively. The market breadth on BSE was positive in the ratio of 1124:1034, while 112 scrips remained unchanged.

The BSE Sensex is currently trading at 26498.68, up by 194.05 points or 0.74% after trading in a range of 26326.89 and 26621.40. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.20%, while Small cap index was up by 0.51%.

The gaining sectoral indices on the BSE were IT up by 2.29%, TECK up by 2.12%, Auto up by 2.02%, Realty up by 0.94% and Power up by 0.93%, while Consumer Durables down by 2.18%, Metal down by 0.77%, Capital Goods down by 0.30%, FMCG down by 0.04% and Bankex down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 4.28%, TCS up by 3.75%, Maruti Suzuki up by 2.62%, Infosys up by 2.47% and Bharti Airtel up by 2.31%.

On the flip side, Lupin down by 1.80%, Tata Steel down by 1.44%, Dr. Reddy’s Lab down by 1.35%, ITC down by 1.14% and Axis Bank down by 0.99% were the top losers.

Meanwhile, clearing air from speculation over the central bank extending the timeline for bank cleanup, Reserve Bank of India (RBI) Deputy Governor N S Vishwanathan has said that a deadline of March 2017 for banks to clean up stressed assets from their balance sheets still “stands”.

Earlier, RBI governor Urjit Patel spoke of ‘pragmatic approach’ in dealing with NPA resolution, in a shift from his predecessor Raghuram Rajan's 'deep-surgery' policy on bad loans, saying that the RBI will be firm but pragmatic in dealing with bank NPAs so that the economy does not feel lack of credit to support growth. The statement led to speculation that the March 2017 deadline been set by the previous RBI governor, Raghuram Rajan may get extended.

Vishwanathan also said the incremental addition of stressed assets in banks was coming down and the trend is seen across the sectors. He added that bad loans in the infrastructure sector are close to 16-17 per cent of the total advances, it is an important issue and we need to have various ways to deal with it. He said the structuring of infrastructure financing has to be very correct as their projects have long gestation and emphasized that these are long gestation project that need to have a proper mix of equity and loan funding.

The CNX Nifty is currently trading at 8148.85, up by 40.40 points or 0.50% after trading in a range of 8100.50 and 8210.05. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 4.48%, TCS up by 3.75%, Zee Entertainment up by 3.00%, Eicher Motors up by 2.80% and Infosys up by 2.66%.

On the flip side, Kotak Mahindra Bank down by 2.48%, Bharti Infratel down by 2.18%, Hindalco down by 2.00%, Lupin down by 1.94% and Ambuja Cement down by 1.70% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 16.46 points or 0.84% to 1,983.99, Taiwan Weighted increased 52.54 points or 0.59% to 8,983.57, Jakarta Composite increased 101.9 points or 2.01% to 5,180.40, Hang Seng increased 133.56 points or 0.6% to 22,457.47 and Nikkei 225 increased 196.09 points or 1.11% to 17,864.24.

On the other hand, Shanghai Composite decreased 6.17 points or 0.19% to 3,200.81 and FTSE Bursa Malaysia KLCI decreased 2.03 points or 0.12% to 1,628.53.