Benchmarks add strength in morning session

Indian equity benchmarks added strength and traded with modest gains in morning session on account of buying in front line blue chip counters, on the day of expiry of September derivative contracts. Though, the rupee took more blows as it slipped to a fresh six and a half month low of 65.88 against the dollar that gained clout overseas on talk of a US rate hike and the prospect of monetary stimulus pullout. Traders took support with the Niti Aayog vice chairman Rajiv Kumar’s statement that the economic downturn which began in the last two years of UPA II regime has bottomed out and the growth will improve in the next two quarters. Separately, multi-lateral funding agency Asian Development Bank (ADB) said it is planning to raise annual lending to India to a maximum of $4 billion per year during 2018-22 to accelerate inclusive economic transformation. Investors took note that the finance ministry has called ministries and financial institutions for discussions to look at sectors where it can step up capital expenditure and generate more investment and jobs at a time when the government is under attack for the weak economic environment. The invitation to financial institutions is seen to be crucial given the limited fiscal headroom for the Centre, especially when Goods and Services Tax (GST) collections remain uncertain. PSU banking stocks were buzzing on report that the government plans to give growth capital to performing state-run banks as it looks to encourage credit disbursement for private investment. An assessment is being carried out and adequate capital will be provided to performing state-run banks to push credit growth.

Meanwhile, real estate stocks were buzzing as the developers are betting big on the upcoming festive season to push housing sales, and are going all out to regain some lost ground, especially at a time when interest rates on home loans are at more than six-year low and demand for affordable housing is picking up. Select FMCG stocks were under pressure on the government’s proposal to stop cigarette and paan shops from selling consumer goods such as soft drinks, biscuits and candy, which doesn’t bode well for companies which expect a decline in sales growth if the move is implemented. IT stocks were under pressure on report that the Donald Trump administration may be on course to reviewing contracts given to foreign companies, including Indian giants like TCS and Infosys. The Indian companies have been asked to submit a progress report of the current projects outsourced to them by the US government. The market may remain volatile as traders may roll over positions in the Futures & Options (F&O) segment to next series.

Traders were seen piling up position in Realty, Healthcare and Metal stocks, while selling was witnessed in Oil & Gas, Consumer Durables and Telecom sector stocks. In scrip specific development, Dr. Reddy’s Laboratories was trading in green on receiving an Establishment Inspection Report (EIR) for its Formulation Srikakulam Plant (SEZ) Unit I, Andhra Pradesh from the US Food and Drug Administration. Ashiana Housing was trading in green on entering into a Memorandum of Understanding (MoU) with a Pune based developer for development of a Group Housing Project on approximately 19 acres of land parcel situated near Hinjwadi, District Pune in state of Maharashtra on revenue sharing basis.

On the global front, Asian markets were trading mostly in red. China’s factories likely cranked up activity for the 14th straight month in September as the country’s year-long building boom and higher prices generate hearty profits, though the pace of growth may have eased slightly from August. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,200 and 9,700 levels respectively. The market breadth on BSE was positive in the ratio of 1373:652, while 114 scrips remained unchanged.

The BSE Sensex is currently trading at 31261.21, up by 101.40 points or 0.33% after trading in a range of 31081.83 and 31261.21. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.73%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Realty up by 1.15%, Healthcare up by 0.93%, Metal up by 0.92%, Basic Materials up by 0.89% and FMCG up by 0.71%, while Oil & Gas down by 0.36%, Consumer Durables down by 0.24%, Telecom down by 0.22%, TECK down by 0.07% and Energy down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 3.06%, Cipla up by 1.36%, ITC up by 1.16%, Sun Pharma up by 1.02% and SBI up by 0.94%.

On the flip side, Asian Paints down by 2.87%, Hero MotoCorp down by 0.56%, Wipro down by 0.56%, Bharti Airtel down by 0.53% and Tata Motors - DVR down by 0.31% were the top losers.

Meanwhile, amid the concern of slowing economic growth of the country, the Niti Aayog vice chairman Rajiv Kumar has raised some hopes and said the economic downturn which began in the last two years of UPA II regime has bottomed out and the growth will improve in the next two quarters. He said that “We will be achieving higher growth in the next two quarters, and I think 2018-19 will be much better than the current year (in terms of economic growth).”

Niti Aayog vice chairman admitted that there have been problems on account of demonetisation and Goods and Services Tax (GST) implementation but now people have adopted to the new tax regime. He noted that historically countries which have adopted GST have all seen some decline in the growth rate because the system struggles to come to new norm.

Kumar applauded government's performance and said India has attracted foreign direct investment (FDI) worth $ 250 billion in the last three years. He said that Indian industry must embrace global cutting edge technology and added that one should think at global level and not just for domestic consumers. He also emphasised on the need of creating trust between government and industry.

The CNX Nifty is currently trading at 9747.90, up by 12.15 points or 0.12% after trading in a range of 9687.55 and 9751.25. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 3.10%, ACC up by 2.38%, Hindalco up by 1.20%, ITC up by 1.16% and Sun Pharma up by 1.06%.

On the flip side, Asian Paints down by 3.04%, Indiabulls Housing down by 2.14%, Eicher Motors down by 1.61%, Aurobindo Pharma down by 1.52% and BPCL down by 1.30% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 89.61 points or 0.32% to 27,552.82, Taiwan Weighted decreased 31.5 points or 0.31% to 10,295.18, Shanghai Composite decreased 4.27 points or 0.13% to 3,341.00, Jakarta Composite decreased 2.92 points or 0.05% to 5,860.10 and FTSE Bursa Malaysia KLCI decreased 1.24 points or 0.07% to 1,763.00.

On the other hand, KOSPI Index increased 2.02 points or 0.09% to 2,374.59 and Nikkei 225 increased 90.65 points or 0.45% to 20,357.70.