Benchmark continue firm trade; Nifty holds 9,800 mark

Indian equity benchmarks continued their firm trade in morning session on account of buying in front line blue chip counters. The rupee extended its gains for the second straight session and opened higher against dollar. FPI on Thursday sold shares worth Rs 848.95 crore with gross purchases and gross sales at Rs 5,719.92 crore and Rs 6,238.16 crore, respectively. Sentiments were upbeat on reports that the government will stick to its borrowing and fiscal deficit targets for this fiscal, indicating that it has no plans to relax spending goals to prop up growth as of now. The finance ministry on Thursday released borrowing calendar for the second half of FY18, indicating a gross borrowing of Rs 2.08 lakh crore, which is in line with the target laid out in the Budget. Separately, Finance Minister Arun Jaitley said the Goods and Services Tax (GST) collections in the first two months have met the target and going forward the revenue will see further surge. Total GST collection for August touched Rs 90,669 crore (up to September 25, 2017), against Rs 94,063 crore mopped up in the first month of the new indirect tax regime rollout.

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. Investors took note that state-run companies can make Rs 25,000-crore additional capital expenditure this fiscal year as the government has urged them to spend more to boost investment. The government also asked central public sector enterprise (CPSEs) to consider higher dividend and explore debt and other funds to meet their capex targets instead of just relying on internal funds. The CPSEs have budgeted an investment of Rs 3.85 lakh crore in 2017-18. Select cement stocks were under pressure on ICRA report that cement demand growth is expected to be around 3.5%-4% during the current financial year, a downward revision against the earlier estimate of 5% as there has been a delay in the revival of cement demand during the first half of FY2018.

Traders were seen piling up position in Realty, Oil & Gas and Utilities stocks, while selling was witnessed in IT and Consumer Durables sector stocks. In scrip specific development, IFCI was trading in green on selling 1.9 crore shares of Tourism Finance Corporation of India (TFCI) for Rs 293 crore. IFCI has sold its 24% stake in TFCI as it has to divest its non-core assets as a part of strategy. Axis Capital was the broker in the block deal. Lovable Lingerie was trading firm as it is going to consider buyback of shares. The meeting of the board of directors of the company is scheduled to be held on October 06, to consider the proposal for buyback of equity shares of the company.

On the global front, Asian markets were trading mostly in green as markets digested a raft of data out of Japan. 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 31,300 and 9,800 levels respectively. The market breadth on BSE was positive in the ratio of 1539:475, while 100 scrips remained unchanged.

The BSE Sensex is currently trading at 31387.24, up by 104.76 points or 0.33% after trading in a range of 31358.98 and 31452.77. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.85%, while Small cap index was up by 1.05%.

The top gaining sectoral indices on the BSE were Realty up by 2.53%, Oil & Gas up by 1.94%, Utilities up by 1.13%, PSU up by 1.02% and Metal up by 0.96%, while IT down by 0.10% and Consumer Durables down by 0.04% were the only losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.46%, Bajaj Auto up by 1.40%, Asian Paints up by 1.24%, HDFC Bank up by 1.17% and ICICI Bank up by 0.96%.

On the flip side, Hindustan Unilever down by 1.93%, Power Grid down by 1.03%, TCS down by 0.58%, Tata Motors - DVR down by 0.47% and Cipla down by 0.43% were the top 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 9809.05, up by 40.10 points or 0.41% after trading in a range of 9795.90 and 9827.35. There were 37 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 6.99%, HPCL up by 3.21%, Eicher Motors up by 2.17%, Bharti Infratel up by 1.88% and Ambuja Cement up by 1.83%.

On the flip side, Hindustan Unilever down by 1.96%, Yes Bank down by 0.88%, Indiabulls Housing down by 0.76%, HCL Technologies down by 0.71% and TCS down by 0.65% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.76 points or 0.04% to 1,758.82, Shanghai Composite increased 10.69 points or 0.32% to 3,350.33, KOSPI Index increased 18.96 points or 0.8% to 2,392.10, Taiwan Weighted increased 34.43 points or 0.33% to 10,330.88, Jakarta Composite increased 48.38 points or 0.83% to 5,889.43 and Hang Seng increased 86.93 points or 0.32% to 27,508.53.

On the other hand, Nikkei 225 decreased 14.63 points or 0.07% to 20,348.48.