Benchmarks trade in fine fettle; Sensex regains 26,500 mark

Indian equity benchmarks have made a positive start and are trading in fine fettle in early deals on Wednesday, with frontline gauges recapturing their crucial 26,500 (Sensex) and 8,150 (Nifty) levels ahead of second quarter GDP data slated to be announced later in the day. The general expectation is that economic growth accelerated to 7.5 per cent in the September quarter from 7.1 per cent in the June quarter but lower than 7.9 per cent growth posted for the March quarter. Traders took some support with Reserve Bank of India’s (RBI) decision to allow bank customers to withdraw amount over and above the weekly limit provided the deposits had been made in legal tender. Some support also came with, a private report stating that government is expected to meet its fiscal deficit target of 3 percent for the next financial year on account of additional revenue from penalty on black money and deposits under the income disclosure. 

Global cues too remains positive with most of the Asian counters trading in green at this point of time ahead of the highly anticipated OPEC meeting in Vienna later in the day. Gains in Asian property shares outweighed losses among commodity producers. The US markets despite paring most of their gains managed a positive close in last session; the pullback from the highs was mainly due to uncertainty ahead of the highly anticipated OPEC meeting on Wednesday.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. The market breadth remained in favor of advances, as there were 1,335 shares on the gaining side against 463 shares on the losing side while 99 shares remain unchanged.

The BSE Sensex is currently trading at 26507.64, up by 113.63 points or 0.43% after trading in a range of 26395.50 and 26507.64. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.77%, while Small cap index was up by 1.08%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.18%, Bankex up by 0.74%, Healthcare up by 0.68%, Basic Materials up by 0.67% and Capital Goods up by 0.56%, while Metal down by 0.51%, Energy down by 0.10%, Oil & Gas down by 0.07% and FMCG down by 0.04% were the few losing indices on BSE.

The top gainers on the Sensex were Adani Ports & Special up by 1.88%, ICICI Bank up by 1.66%, Maruti Suzuki up by 1.34%, Lupin up by 0.93% and Asian Paints up by 0.90%. On the flip side, ITC down by 0.45%, Tata Steel down by 0.45%, NTPC down by 0.43%, Tata Motors down by 0.36% and Reliance Industries down by 0.24% were the top losers.

Meanwhile, international ratings agency, Fitch Ratings in its latest report titled ‘Global Economic Outlook - November’ has lowered India’s Gross Domestic Product (GDP) growth forecast for current fiscal to 6.9 percent from 7.4 percent forecasted earlier, as there will be temporary disruptions to economic activity post demonetisation. The ratings agency also revised GDP growth forecast for 2017-18 and 2018-19 to 7.7 percent from 8 percent earlier. Fitch added that the Reserve Bank of India’s (RBI) policy rate cuts by a total 150bp since the beginning of 2015 are likely to feed through to higher GDP growth.

The report said that economic activity will be hit in the October- December quarter because of the cash crunch created by withdrawal of Rs 500 and Rs 1000 notes that accounted for 86 percent of the value of currency in circulation and replacing that with new Rs 500 and Rs 2000 notes. It added that gradual implementation of the structural reform agenda is expected to contribute to higher growth, as will higher real disposable income, supported by an almost 24 percent hike in civil servants’ wages. But the anticipated recovery in investment looks a bit less certain in light of ongoing weakness in the data. It added that the impact on GDP growth will increase the longer the disruption continues, and the medium-term effect of the currency withdrawal on GDP growth is uncertain, but is unlikely to be large.

On the currency ban, it said consumers do not have the cash needed to complete purchases, and there have been reports of supply chains being disrupted and farmers unable to buy seeds and fertiliser for the sowing season. Time spent queuing in banks is also likely to have affected general productivity and the impact on GDP growth will increase the longer the disruption continues. It added that a surge in low-cost funding due to the demonetisation may remove a constraint on banks that prevented lending rates from keeping pace with the RBI's policy rate cuts in recent years, although this will depend on deposits remaining in banks beyond the next few months.

The CNX Nifty is currently trading at 8175.80, up by 33.65 points or 0.41% after trading in a range of 8139.25 and 8176.30. There were 37 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were ACC up by 2.04%, Ambuja Cement up by 2.02%, ICICI Bank up by 1.80%, Adani Ports & Special up by 1.61% and Grasim Industries up by 1.51%. On the flip side, Idea Cellular down by 1.89%, Bharti Infratel down by 1.43%, BPCL down by 0.99%, Zee Entertainment down by 0.66% and Hindalco down by 0.57% were the top losers.

Asian markets were trading mostly in green; KOSPI Index rose 1.7 points or 0.09% to 1,980.09, Taiwan Weighted gained 4.65 points or 0.05% to 9,197.03, Hang Seng increased 29.51 points or 0.13% to 22,766.58 and Jakarta Composite was up by 36.35 points or 0.71% to 5,173.02.

On the flip side, Shanghai Composite decreased 31.52 points or 0.96% to 3,251.40, Nikkei 225 slipped 21.39 points or 0.12% to 18,285.65 and FTSE Bursa Malaysia KLCI was down by 2.3 points or 0.14% to 1,624.63.