Benchmarks eke out slender gains

Indian equity benchmarks ended the volatile day of trade with marginal gains, as simmering geopolitical tensions kept many investors on edge. Markets started the session on optimistic note with both key indices recapturing their crucial 9,950 (Nifty) and 31,700 (Sensex) levels, mainly supported by firm global cues with report that US President Donald Trump and congressional leaders agreed to raise the government debt limit until December, eliminating the risk of a government shutdown for now. Back on regional turf, traders also took some support with a private report stating that economic activity in the country lost some pace amid GST related disruptions but underlying growth momentum remains strong and the country may clock 6.7 percent growth this fiscal. It further said that a number of high frequency growth indicators are indicating that end demand is holding up well and is running counter to the slowdown exhibited in the national accounts.

However, markets failed to hold on to their initial gains and pared most of their gains to go home with small gains, as there was some concern in the markets with market regulator Securities and Exchange Board of India (SEBI) expressing its worries over stronger rupee. It has stated that the huge inflow of foreign investments into the country is having an impact on the rupee and regulators need to manage it through a calibrated system. As per SEBI data foreign portfolio investors have invested Rs 44,150 crore in Indian equities and Rs 1.29 lakh crore in debt so far this year. Separately, North Korea’s Minister of External Economic Relations and head of the delegation at the Eastern Economic Forum in Vladivostok, Kim Yong-jae, said that the country will introduce strong countermeasures against the United States’ attempts to exert pressure through strong sanctions.

Firm opening in European counters provided some support to domestic markets with all CAC, DAX and FTSE trading in green, as markets waited to hear just how close the European Central Bank is to scaling back its more than 2 trillion euro ($2.75 trillion) stimulus program. Asian markets closed mixed, amid hopes for a temporary extension of the US debt ceiling.

Back home, most of the export oriented stocks edged higher, as the Commerce Minister Suresh Prabhu said his ministry is looking at certain measures to rev up country’s exports in a “shortest possible time” and will also strive to address the issues facing exporters post GST. He added that exports to gross domestic product (GDP) ratio of India has to improve substantially as the outbound shipments have a great ability to generate economic activity. Select sugar stocks too edged higher on report that India's sugar output is expected at 25.1 million tonnes in the year beginning October, up 24.2% from the 2016/17 season.

The NSE’s 50-share broadly followed index Nifty gained over ten points to end comfortably above its psychological 9,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex increased marginally to hold its crucial 31,650 mark. The broader markets outperformed benchmarks and ended the session with a gain of around a half a percent. The market breadth was in the favour of advances, as there were 1,404 shares on the gaining side against 1,171 shares on the losing side, while 161 shares remain unchanged.

Finally, the BSE Sensex rose 0.77 points to 31,662.74, while the CNX Nifty was up by 13.70 points or 0.14% to 9,929.90.

The BSE Sensex touched a high and a low of 31,814.96 and 31,620.44, respectively and there were 19 stocks on gaining side as against 12 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index jumped 0.76%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Metal up by 1.41%, Auto up by 0.85%, Basic Materials up by 0.79%, Consumer Discretionary Goods & Services up by 0.73% and Realty was up by 0.69%, while Telecom down by 0.75%, Energy down by 0.41%, Oil & Gas down by 0.39% and FMCG was down by 0.23% were the few losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.02%, Bajaj Auto up by 1.37%, Dr. Reddy’s Lab up by 1.24%, Sun Pharma up by 1.06% and Hero MotoCorp up by 0.99%. On the flip side, ITC down by 1.89%, Tata Motors - DVR down by 1.42%, Bharti Airtel down by 1.36%, Tata Motors down by 1.17% and Coal India down by 0.96% were the top losers.

Meanwhile, expressing hope that a major portion of the banks’ non-performing asset (NPA) issue will be resolved by the end of the current fiscal year 2017-18 or early next year, the principal economic adviser in the finance ministry Sanjeev Sanyal has said that the Reserve Bank of India (RBI) has already identified 50 large stressed accounts that forms the two-thirds of the over Rs 8 trillion dud loans and banks have started resolving these assets accounts through the bankruptcy code.

Sanyal said that they recognised that it’s painful right now, not only for those 50 companies, but for everybody else because the banking system itself has stopped expanding as a result of this and it has stalled the wider economy. They think this clean-up is necessary and is well underway. He added that after the clean-up, the government will know the recapitalisation amount required for the banks and also said that there are many ways in which bank recapitalisation can be done.

The principal economic adviser further said that at present, cleaning up banks’ balance sheets is the priority of the government and then it will look into other matters such as privatisation. He said ‘For the time being, I think a major clean-up is what has to be done first. Even if you wanted to sell them you cannot do it right now. So, let's clean them up first, expand them, get them healthy and then we can have discussions on their privatisation.’

The CNX Nifty traded in a range of 9,964.85 and 9,917.20. There were 29 stocks in green as against 22 stocks in red on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 4.06%, Vedanta up by 2.47%, Eicher Motors up by 2.39%, Mahindra & Mahindra up by 1.93% and Bosch up by 1.74%. On the flip side, BPCL down by 2.19%, Bharti Airtel down by 1.74%, ITC down by 1.70%, Tata Motors - DVR down by 1.35% and Tata Motors down by 1.16% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose 34.66 points or 0.47% to 7,388.79, France’s CAC increased 44.12 points or 0.86% to 5,145.53 and Germany’s DAX was up by 143 points or 1.17% to 12,357.54.

Asian equity markets ended mixed on Thursday despite overnight gains in the US and European markets. While a temporary extension of the US debt ceiling to December helped spur gains earlier in the session, markets succumbed to selling pressure at higher levels as the day progressed. The European Central Bank meets later today, with investors waiting to see whether ECB President Mario Draghi will signal measures towards winding down the bank's quantitative easing program at some point this autumn. China stocks fell as profit taking in resource shares following their recent rally and weakness in the banking sector offset strong gains in real estate companies. Meanwhile, Japanese shares rebounded from four-month intraday lows hit the previous day after the yen sold off overnight on news of extension of the US debt ceiling.  South Korea shares ended higher on easing geopolitical tensions after US President Donald Trump said the use of military force against Pyongyang will not be his ‘first choice’.