Benchmarks trade firm in late morning session

Indian equity benchmarks continued their firm trade in late morning session taking cues from regional counterparts as most Asian markets jumped in early trade following an overnight rise in US stocks. The rupee strengthened against the US dollar in early trade at the interbank foreign exchange on increased selling of the greenback by exporters and banks amid higher opening in the domestic equity market. Forex dealers attributed the weakness of the dollar against other currencies to investors viewing the recent spurt of the greenback as unsubstantiated which supported the rupee. Prime Minister Narendra Modi stated that India’s economy is expected to grow five folds by 2040, the government expects growth in manufacturing, transport, civil aviation among other sectors. Modi said while global economy is going through uncertainty, India has shown tremendous resilience. Indian economy is more stable than others with investment in India at the highest levels. The country's current account deficit has improved steadily. Investors will be keeping an eye on RBI monetary policy review scheduled on Wednesday whereby the street expects Reserve Bank Governor Urjit Patel to again go in for a 0.25% interest rate cut with an aim to cushion the impact of demonetization. The monetary policy committee (MPC) will review its fifth bi-monthly policy beginning later in the day. This will be the first monetary policy review after demonetization of old Rs 500 and Rs 1,000 currency notes following which banks witnessed surge in deposits. Traders were seen selling in Realty, Oil & Gas and IT stocks, while selling was witnessed in FMCG, Consumer Durables and Bankex sector stocks. In scrip specific development, Inox Wind, India’s leading wind energy solutions provider, was trading firm after the company bagged an order for a 50 MW wind power project to be deployed in the state of Gujarat from SJVN, a Category-I Mini Ratna CPSE and Hydroelectric power major.

On the global front, Asian shares were trading in green, as sentiment was boosted after rating agency Standard & Poor’s said the outcome of Italian referendum would not have an immediate impact on Italy's creditworthiness. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,150 and 26,400 levels respectively. The market breadth on BSE was positive in the ratio of 1470:603, while 103 scrips remained unchanged.

The BSE Sensex is currently trading at 26452.56, up by 103.46 points or 0.39% after trading in a range of 26393.99 and 26490.42. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.68%, while Small cap index was up by 0.75%.

The top gaining sectoral indices on the BSE were Realty up by 1.46%, Oil & Gas up by 1.08%, IT up by 0.94%, Power up by 0.92% and TECK up by 0.85%, while FMCG down by 0.66%, Consumer Durables down by 0.10% and Bankex down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were HDFC up by 2.15%, GAIL India up by 1.87%, NTPC up by 1.33%, Infosys up by 1.31% and Wipro up by 1.22%.

On the flip side, ITC down by 1.08%, Hindustan Unilever down by 0.89%, Axis Bank down by 0.73%, Asian Paints down by 0.49% and Hero MotoCorp down by 0.45% were the top losers.

Meanwhile, the Monetary Policy Committee (MPC) headed by RBI Governor Urjit Patel started its two day meeting (December 6 and 7, 2016) for the Fifth Bi-monthly Monetary Policy review for 2016-17. There are expectations of at least 0.25 percent policy rate cut in order to tackle the impact of demonetisation move by the central government.

This will be Patel’s second monetary policy review since he took over as RBI Governor. In its first meeting of the MPC that happened in October, it was decided to cut the policy rates under the liquidity adjustment facility (LAF) by 25 basis points to 6.25 per cent from 6.5 per cent. The RBI had since January 2015 reduced repo rate by 1.75 per cent with an aim to boost economic growth.

This policy review has become significant as it will be the first monetary policy review after demonetisation of old Rs 500 and Rs 1,000 currency notes, following which banks witnessed surge in deposits after which in a surprise move Reserve Bank of India's (RBI) ordered banks to transfer 100% of their cash under the central bank's cash reserve ratio (CRR) from deposits generated between September 16 and November 11.

The CNX Nifty is currently trading at 8158.80, up by 30.05 points or 0.37% after trading in a range of 8148.50 and 8174.05. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 2.67%, HDFC up by 2.36%, Zee Entertainment up by 1.91%, GAIL India up by 1.88% and Idea Cellular up by 1.58%.

On the flip side, ITC down by 1.25%, Eicher Motors down by 1.03%, Hindustan Unilever down by 0.82%, Axis Bank down by 0.80% and Asian Paints down by 0.67% were the top losers.

The Asian markets were trading in green; Shanghai Composite increased 0.42 points or 0.01% to 3,205.13, FTSE Bursa Malaysia KLCI increased 3.57 points or 0.22% to 1,628.54, Jakarta Composite increased 4.93 points or 0.09% to 5,273.24, KOSPI Index increased 29.02 points or 1.48% to 1,992.38, Nikkei 225 increased 86.34 points or 0.47% to 18,361.33, Taiwan Weighted increased 98.62 points or 1.08% to 9,259.28 and Hang Seng increased 157.98 points or 0.7% to 22,663.53.