Benchmarks continue to hold their head above water

Indian equity benchmarks paired some early gains and were trading in a narrow range with a positive bias in noon session, as investors remained hopeful that Reserve Bank of India (RBI) will reduce interest rates in its policy review later in the day. Besides, firm global cues coupled with the appreciation in rupee value against the dollar aided to the optimistic sentiments. Some support also came with Asian Development Bank’s (ADB’s) report, indicating that the largest economies of Asia - India and China - will help maintain the growth rate of the region at 5.7% in 2016 and 2017. The report also mentioned that India's growth prospects have got a boost from the acceptance of the 7th pay panel recommendations and likely implementation of the Goods and Services Tax (GST) regime next year. Meanwhile, former RBI Governor D Subbarao has said the Indian government's decision to delegalise high denomination currency notes may hurt growth in short-term, but in the medium- to long-term it will have positive macroeconomic implications. According to him, the banks will see their cost of funds declining even in the absence of any further policy easing by the RBI, and this should encourage them to reduce lending rates and pump credit into the economy. Also appreciating the move, Vedanta Chairman Anil Agarwal said that he firmly believes that Prime Minister Narendra Modi’s demonetisation initiative will be good for India in the long run, arguing that a cashless economy means fewer distractions when it comes to doing business

On the global front, Asian markets were trading mostly higher on Wednesday, tracking a strong lead from the Wall Street where markets rallied to another record in the wake of strong US economic data. However, South Korea's Kospi slipped, as the Finance Minister Yoo Il-ho said that consumer sentiment is softening due to political uncertainties about the country's political leadership and financial market volatility. Further, oil prices fell on persistent doubts a planned crude production cut led by OPEC and Russia would be deep enough to end a supply overhang that has dogged markets for over two years

Back home, stocks from Oil & Gas, PSU and Realty counters were supporting the markets’ uptrend, while those from IT, FMCG and Capital Goods counters were showing some cautiousness. In scrip specific development, Adani Enterprises gained after the company incorporated a wholly-owned subsidiary namely, Adani Cementation (ACL) to carry on the cement business. Furthermore, Petronet LNG surged on the report that the company is planning to enter into retail sales of liquefied natural gas (LNG) through fuel outlets across the country.

The market breadth remained pessimistic as there were 1358 shares on the gaining side against 862 shares on the losing side, while 129 shares remained unchanged.

The BSE Sensex is currently trading at 26423.98, up by 31.22 points or 0.12% after trading in a range of 26408.77 and 26469.93. 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 0.26%, while Small cap index up by 0.28%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.94%, PSU up by 0.88%, Realty up by 0.72%, Auto up by 0.65% and Bankex up by 0.63%, while IT down by 0.58%, TECK down by 0.48%, FMCG down by 0.15% and Capital Goods down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 1.71%, HDFC up by 1.54%, Hero MotoCorp up by 1.06%, Asian Paints up by 0.77% and NTPC up by 0.76%. On the flip side, Sun Pharma down by 4.05%, TCS down by 1.09%, Lupin down by 0.63%, Wipro down by 0.48% and ITC down by 0.37% were the top losers.

Meanwhile, the leading rating agency - CRISIL in its latest report has stated that the price of petrol may increase 5-8 per cent and that of diesel by 6-8 per cent over the next 3-4 months and massively boost the margins of state-run refiners, following the move by Organization of Petroleum Exporting Countries (OPEC) to cut production from next month. Report further highlighted that the price of Brent crude could increase to $50-55 per barrel by March 2017, and if it surges to $60, the price of petrol and diesel could touch Rs.80 and Rs.68 a litre, respectively. 

As per the report, increasing crude prices also mean that profitability of public sector refiners would improve in the third quarter of the current fiscal driven by inventory gains. It noted that in December, the average price of Brent is seen over $50. Given that refiners typically book crude 30-40 days in advance, prices for December delivery will be lower at $46 as was seen in November. Report added that this inventory gain is what will boost the Gross Refinery Margins (GRMs) of public sector refiners in the third quarter to $6-7 per barrel levels from $3.8 in the second quarter.

The report pointed out that a production cut always lifts prices, but the success of the OPEC agreement depends on adherence. Previously, there have been instances of members breaking away from the cartel because of domestic compulsions. On domestic demand scenario, the report expects the demonetization and the consequent reduction in economic growth to curb usage, but things would rebound once currency in circulation reverts to normal level. Recently, OPEC decided to cut production of crude oil by 1.2 million barrels per day (mpbd) for the first time since 2008.

The CNX Nifty is currently trading at 8158.80, up by 15.65 points or 0.19% after trading in a range of 8149.90 and 8170.70. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 2.31%, Idea Cellular up by 2.22%, BPCL up by 1.93%, Yes Bank up by 1.80% and Adani Ports & Special up by 1.77%. On the flip side, Sun Pharma down by 4.19%, Zee Entertainment down by 1.69%, Tech Mahindra down by 1.24%, TCS down by 0.74% and Bharti Infratel down by 0.67% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.17%, Shanghai Composite gained 0.43%, Taiwan Weighted increased 0.14%, Hang Seng added 0.34% and Nikkei 225 was up by 0.72%. On the flip side, Jakarta Composite decreased 0.75% and KOSPI Index was down by 0.1%.