Benchmarks trade with traction in early deals

Indian equity benchmarks have made a gap-up opening and are trading in fine fettle in early deals amid supportive global cues. Sentiments also remained up-beat with statement of Niti Aayog member Bibek Debroy, who is also Chairman of the Prime Minister’s Economic Advisory Council that while there may be some minor problems with the economy, it was nothing to be worried about. Some support also came with report that net buying by domestic institutional investors (DIIs) showed a sharp spurt of Rs 5,196 crore, however, foreign investors offloaded shares worth Rs 5,328 crore on Thursday. Traders shrugged off report from credit rating agency ICRA which has said that Reserve Bank is likely to leave policy rates unchanged in the forthcoming policy review next month as it expects a spike in retail inflation going ahead.

Global cues remained supportive with Asian markets trading mostly in green at this point of time. However, gains remained capped, as the chances of higher U.S. interest rates by the end of the year now sit at about 65 percent. Japanese market was down as the country’s inflation rose the most in more than two years in August and advanced for an eighth month. The US markets ended modestly higher in last session, though the trade remained lackluster with the major averages spending much of the day on opposite sides of the unchanged line.

Back home, the export oriented stocks remained buzzing as the Industry bodies and exporters raised their concerns related to the Goods and Services Tax (GST), including timely refund of duties, with Finance Minister Arun Jaitley at a meeting. Meanwhile, the market breadth indicating the overall health of the market was strong, with 1,463 shares gaining and 315 shares declining, while a total of 72 shares were unchanged.

The BSE Sensex is currently trading at 31435.65, up by 153.17 points or 0.49% after trading in a range of 31360.98 and 31452.77. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 1.05%, while Small cap index was up by 1.16%.

The top gaining sectoral indices on the BSE were Realty up by 2.76%, Telecom up by 1.47%, Utilities up by 1.45%, Oil & Gas up by 1.42% and Metal up by 1.37%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Bajaj Auto up by 1.35%, HDFC Bank up by 1.33%, Asian Paints up by 1.08%, Coal India up by 0.96% and SBI up by 0.87%. On the flip side, Hindustan Unilever down by 0.86%, TCS down by 0.69% and Wipro down by 0.37% were the few losers.

Meanwhile, credit ratings agency, ICRA in its latest report has said that the Reserve Bank of India (RBI) is likely to leave policy rates unchanged in its upcoming policy review meeting in the month of October, as consumer price index (CPI) inflation is expected to chart an upward trajectory over the coming months, and print between 4.5 and 5 percent in March 2018. The report came following country’s first quarter gross domestic product (GDP) growth dropping to a three-year low of 5.7 percent.

During the month of August, retail inflation had reached to a five-month high of 3.36 percent and it was 2.36 percent in July. In August, inflation figures were at the highest level since March 2017, when the figure was 3.89 percent. The rating agency estimated retail inflation at 3.7 per cent in FY18, which is lower than the medium-term target of 4 percent and added that at present, the repo rate is at 6%, there maybe room for further monetary easing.

The report further said that while an interest rate cut would be welcomed by corporates, it’s unlikely to be sufficient to meaningfully rekindle investment activity. Extra budgetary resources raised through tax-free bonds by Central PSUs, could boost investment in high-multiplier sectors such as roads, railways, metro networks and affordable housing, without affecting the fiscal deficit. Moreover, it added that targeted policy intervention to address procedural concerns like those being highlighted by exporters, may be more effective than a 25 bps rate cut.

ICRA expects the Monetary Policy Committee (MPC) to revise its baseline forecast for gross value-added (GVA) growth for FY18 to under 7.3 percent estimated in the June and August policies. It also said that the recent data on economic activity has been subdued and the transitional challenges posed by the goods and services tax (GST) have persisted for longer than what was initially anticipated, dampening business sentiment. However, it said that the recent slowdown in growth is likely to prove transitory in nature.

The CNX Nifty is currently trading at 9821.45, up by 52.50 points or 0.54% after trading in a range of 9796.25 and 9827.35. There were 42 stocks advancing against 8 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were GAIL India up by 6.50%, Bharti Infratel up by 2.57%, Eicher Motors up by 2.47%, Vedanta up by 2.14% and Ambuja Cement up by 1.49%. On the flip side, Hindustan Unilever down by 0.90%, TCS down by 0.61%, Tech Mahindra down by 0.55%, HCL Tech down by 0.52% and Wipro down by 0.47% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.96 points or 0.05% to 1,759.02, Shanghai Composite gained 8.5 points or 0.25% to 3,348.14, KOSPI Index increased 16.54 points or 0.7% to 2,389.68, Taiwan Weighted jumped 38.74 points or 0.38% to 10,335.19, Jakarta Composite surged 51.31 points or 0.88% to 5,892.35 and Hang Seng was up by 91.05 points or 0.33% to 27,512.65.

On the flip side, Nikkei 225 was down by 29.24 points or 0.14% to 20,333.87.