Markets recover from day’s low; Sensex above 26,300 mark

Local equity markets, recovering from day’s low point, were trading in positive territory, albeit with slender gains due to lower level buying activity by market-participants amidst weak global cues. Sentiments got some support with Moody’s Investors Service affirming India’s sovereign rating at ‘Baa3’ with a positive outlook, saying it expects policymakers to continue reforms to achieve balanced growth and reduce the government's debt load. Moody's further said that India's policy makers have taken important steps to strengthen the country's institutions. Besides, easing inflation numbers, both WPI and CPI, offering more room to RBI to lower rate gave investors some level of comfort. However, sustained capital outflows by foreign funds have restricted the gains. Investors remained on the sidelines, keeping an eye on Parliament winter session where the government is unlikely to bring three bills related to GST in the coming days, but it is hopeful of pushing them in the latter half of the winter session. Meanwhile, shares of consumer durables companies continued to witness selling pressure with jewellery shares emerging as the top loser for the fourth straight trading sessions on fears of falling demand in wake of the demonetization. Selling has also observed in selected IT stocks after Information technology industry body Nasscom cut growth guidance for the industry to 8-10 percent in constant currency terms from 10-12 percent.

On the global front, a drop in oil prices weighed on Asia markets on Thursday, ahead of inflation, jobs and exports data expected from the US and testimony from Federal Reserve Chairwoman Janet Yellen on the economic outlook to Congress later in the day. Further, Japanese market retreated from a more than nine-month high touched in the previous session and is modestly lower, with the central bank's first fixed-rate debt purchasing operation hurting the financial stocks.

Back home, stocks from Metal, Oil & Gas and Banking counters were supporting the markets’ uptrend, while those from information technology (IT), Consumer Durables and Realty counters were adding to the underlying cautious undertone. In scrip specific development, Shipping Corporation of India slumped after the company posted standalone net loss of Rs 20 crore for the quarter ended September 2016. On the flip side, Indraprastha Gas (IGL) surged after the company reported a healthy 41% year on year jump in standalone net profit at Rs 144 crore for the quarter ended September 30, 2016.

The market breadth remained pessimistic as there were 990 shares on the gaining side against 1275 shares on the losing side, while 126 shares remained unchanged.

The BSE Sensex is currently trading at 26347.65, up by 48.96 points or 0.19% after trading in a range of 26249.30 and 26449.87. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.16%, while Small cap index down by 0.13%.

The top gaining sectoral indices on the BSE were Metal up by 1.08%, Oil & Gas up by 0.84%, Bankex up by 0.74%, PSU up by 0.61% and FMCG up by 0.22%, while IT down by 0.61%, Consumer Durables down by 0.59%, TECK down by 0.52%, Realty down by 0.49% and Power down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.51%, Axis Bank up by 1.77%, GAIL India up by 1.72%, Sun Pharma up by 1.69% and Cipla up by 1.42%. On the flip side, Bajaj Auto down by 1.71%, Wipro down by 1.67%, Hero MotoCorp down by 1.51%, Power Grid down by 1.44% and TCS down by 1.12% were the top losers.

Meanwhile, Global credit rating agency, Moody's Investors Service (Moody's) has affirmed India's Baa3 ratings (the lowest investment grade) and maintained the positive outlook on the rating. The positive outlook indicates Moody’s expectation that continued policy reform implementation will allow balanced growth to support reduction in government debt burden. Moody's has also affirmed India's P-3 short-term local currency issuer rating.

Moody's further said that India's policy makers have taken important steps to strengthen the country's institutions. However, it said that the reform effort of the government to date has not yet achieved the conditions that would support an upgrade. Therefore, it said that to reduce the government's debt burden the country still needed to accelerate private investment. 

Moody’s praised the government’s broad range of policy measures that are helpful to controlling inflation and limiting current account deficit. The implemented of policies is such as the passage and ongoing implementation of a range of economic reform measures, including the Goods and Services Tax and reform of the bankruptcy code, points to improvements in government effectiveness. It added that this assessment is also supported by higher rankings in the World Economic Forum Global Competitiveness Index and World Bank Worldwide Governance Indicators.

According to Moody's, so far private investment has not picked-up in response to the government's measures, denoting limited policy effectiveness. Investment has been constrained by high leverage in some sectors, a relatively unfavorable global environment and, in some cases, limited access to finance. Also, Businesses are likely to have opted to wait for more certainty about the tangible implications of reforms on their operating environment.

The CNX Nifty is currently trading at 8123.90, up by 12.30 points or 0.15% after trading in a range of 8091.65 and 8151.25. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.32%, Tata Motors up by 2.39%, Bank of Baroda up by 2.05%, Sun Pharma up by 1.89% and GAIL India up by 1.80%. On the flip side, Wipro down by 2.22%, HCL Tech down by 2.16%, ACC down by 1.78%, Power Grid down by 1.70% and Eicher Motors down by 1.66% were the top losers.

Asian markets were trading mostly in red; Hang Seng slipped 0.17%, Nikkei 225 shed 0.01%, Shanghai Composite decreased 0.33%, FTSE Bursa Malaysia KLCI dropped 0.15% and Jakarta Composite dipped 0.04%. On the flip side, Taiwan Weighted rose 0.37% and KOSPI Index was up by 0.12%.