Late hour buying help benchmarks to end flat

Buying which emerged in last leg of trade helped markets to erase all of their initial losses to end flat on Friday. Markets started off on pessimistic note, as geo-political worries resurfaced with North Korea’s new provocative move of firing another ballistic missile over Japan. Key gauges traded in red terrain for most part of the day, as sentiments remained dampened with SBI research report stating that country’s GDP is likely to remain below 6 percent in the second quarter of 2017-18 owing to muted agriculture growth and sluggish performance of manufacturing and mining sector. The GDP stood at a three year low at 5.7% for April-June quarter of 2017-18, which the report said has raised concerns about the annual GDP numbers for the fiscal. Traders also remained concerned with United Nations’ report stating that effects of demonetisation and rollout of the Goods and Services Tax regime on the informal sector and reduction in pace of credit creation may affect India’s growth prospects and the country unlikely to serve as the ‘growth pole’ for the global economy in the near future.

Domestic bourses even went to test psychological 32,150 (Sensex) and 10,050 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trim their losses from thereon and ended near their neutral lines, as investors continued hunt for fundamentally strong stocks. Traders took some sense of relief with report that India and Japan have signed 15 key agreements including open sky agreement, after the historic launch of India's first bullet train project between Ahmedabad and Mumbai, to further expand the horizon of their bilateral relationship.

Recovery in Asian markets too provided some support to domestic markets with most of the peers ending in green. A poll showed that Japanese manufacturers’ confidence worsened for the first time in four months in September from the previous month's decade-high level and was expected to fall further, weighed by global uncertainty. European markets were trading in red, led by over a percent fall in UK’s market after a blast on a London underground train left some passengers with facial burns.

Back home, Information Technology (IT) stocks remained on buyers’ radar after a senior US official sought to allay India’s concerns on the H-1B visa programme, which is being reviewed by the Trump administration, saying there are no restrictions in place. The official said around 70% of the visas issued under the H-1B category over the past nine months have gone to Indians and that a record 1.2 million visas of Indians were adjudicated by the US last year. Select stocks from textile sector remained in focus, as the Textile Commissioner said that country’s technical textile market has huge growth potential and it is expected to grow at 12% per annum to reach $23 billion (Rs 1,50,000 crore) in 2020.

Finally, the BSE Sensex gained 30.68 points or 0.10% to 32272.61; however the CNX Nifty was down by 1.20 points or 0.01% to 10085.40.

The BSE Sensex touched a high and a low of 32,356.11and 32,138.38, respectively and there were 15 stocks on gaining side as against 16 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index slipped 0.28%, however Small cap index was up by 0.38%.

The top gaining sectoral indices on the BSE were IT up by 1.04%, TECK up by 0.77%, Metal up by 0.29%, Oil & Gas up by 0.28% and Consumer Discretionary Goods & Services was up by 0.26%, while Power down by 0.90%, Telecom down by 0.56%, Utilities down by 0.54%, Realty down by 0.49% and Capital Goods was down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 4.71%, Bajaj Auto up by 3.19%, Coal India up by 1.94%, Infosys up by 1.83% and Wipro up by 0.65%. On the flip side, Dr. Reddy’s Lab down by 1.77%, ITC down by 0.92%, NTPC down by 0.77%, SBI down by 0.68% and Tata Motors down by 0.66% were the top losers.

Meanwhile, lowering India’s GDP growth forecast for the year 2017 to 6.7% from 7% in 2016, a UN report has said that the informal sector which still accounts for at least one-third of the country’s GDP and more than four-fifths of employment, was badly affected by the government’s ‘demonetization’ move, and it may be further affected by the rollout of the Goods and Services Tax (GST) regime.

Referring to India and China, UNCTAD’s Trade and Development 2017 report noted that at the current levels of growth, the countries are unlikely to serve as growth polls for the global economy in near future. It pointed out that India’s growth performance depends to a large extent on reforms to its banking sector, which is burdened with large volumes of stressed and non-performing assets (NPAs), and there are already signs of a reduction in the pace of credit creation. It added that banking sector in India is saddled with NPAs of over Rs 8 lakh crore.

The report further said that since debt-financed private investment and consumption have been important drivers of growth in India, the easing of the credit boom is likely to slow GDP growth. It also said that the gradual slowdown of China is expected to continue as it moves ahead with rebalancing its economy, towards domestic markets. Thus, it noted that the dependence on debt makes the boom in China and India difficult to sustain and raises the possibility that when the downturn occurs in these countries, deleveraging will accelerate the fall and make recovery difficult. 

The CNX Nifty traded in a range of 10,115.15 and 10,043.65. There were 21 stocks in green as against 30 stocks in red on the index.

The top gainers on Nifty were ONGC up by 4.33%, Bajaj Auto up by 3.47%, Coal India up by 2.25%, Bharti Infratel up by 1.89% and Infosys up by 1.82%. On the flip side, Dr. Reddy’s Lab down by 2.00%, Indusind Bank down by 1.61%, Aurobindo Pharma down by 1.31%, Tata Power down by 1.17% and ACC down by 1.13% were the top losers.

European markets were trading in red; UK’s FTSE 100 declined 89.46 points or 1.23% to 7,205.93, Germany’s DAX decreased 15.05 points or 0.12% to 12,525.40 and France’s CAC was down by 7.78 points or 0.15% to 5,217.42.

Asian equity markets ended mostly higher on Friday. Japanese shares shrugged off a weak start to end modestly higher as the dollar regained its footing against the yen after sliding in early trading. Meanwhile, North Korea's latest missile launch over the Japanese archipelago earlier in the day stirred new worries and stronger-than-expected US inflation data stoked expectations of another Fed rate hike this year. Japan's PM Shinzo Abe said his country would ‘never tolerate’ North Korea's dangerous actions. Rex Tillerson, US secretary of state, said that these continued provocations only deepen North Korea's diplomatic and economic isolation. Chinese shares ended lower as a slew of soft data suggested the world’s second-largest economy is starting to lose some momentum in the face of rising borrowing costs and government-mandated capacity cuts.