Benchmarks continue firm trade; Nifty holds 9,850 mark

Indian equity benchmarks continued their firm trade in morning session on account of buying in front line blue chip counters. The rupee opened lower against dollar on account of buying of American currency by banks and importers amid sustained outflows by foreign portfolio investors. Foreign Portfolio Investors stood net sellers in domestic equity markets on Friday and sold shares worth Rs 5,213 crore with gross purchases and gross sales stood at Rs 7,200.40 crore and Rs 12,413.59 crore, according to data available with depository CDSL. Traders took some encouragement with Finance Minister Arun Jaitley’s statement that net collections till September 18 of this fiscal grew 15.7% to Rs 3.7 lakh crore. The number of taxpayers rose to 6.26 crore in 2016-17 from 4.72 crore in 2012-13. According to a finance ministry statement, some parliamentarians suggested that more searches be conducted against black money holders since many people are still transacting in black money. They also suggested lowering tax rate and changes to tax slabs. Jaitley indicated that the government would consider reducing the goods and services tax slabs and easing compliance burden for small taxpayers once revenues from GST better those from the previous tax regime.

Some support also came after the Nikkei India Manufacturing Purchasing Managers’ Index, or PMI, remained unchanged at 51.2 in September. As per the report, September data painted an encouraging picture as the sector continued to recover from the disruptions caused by the introduction of the GST in July. Investors took note that the Centre has begun a slew of measures to boost medium and small scale industries, exports and the textile sector. As per report, September 27 Cabinet meeting had discussed proposals related to providing stimulus to medium and small-scale industries, exports and the textile sector which have not performed to their optimum strength in last few quarters.

Traders were seen piling up position in Energy, Consumer Durables and Auto stocks, while selling was witnessed in Capital Goods sector stocks. Auto stocks were buzzing as automakers report their monthly sales numbers for September. In scrip specific development, Reliance Communications (RCom) was trading under pressure after the company called off its merger with Aircel citing regulatory uncertainties and alluding to sabotage by ‘vested interests’, dealing a blow to the hopes of the two debt-ridden telecom companies to jointly take on stronger rivals Bharti Airtel and Reliance Jio Infocomm besides raising questions about their long-term survival.

On the global front, Asian markets were trading in green. Factories in Asia’s largest economies cranked up activity in September as a synchronized upswing in growth globally pointed to solid consumption of manufactured goods heading into the lucrative end-of-year shopping season. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,500 and 9,850 levels respectively. The market breadth on BSE was positive in the ratio of 1488:648, while 99 scrips remained unchanged.

The BSE Sensex is currently trading at 31501.66, up by 217.94 points or 0.70% after trading in a range of 31440.48 and 31615.28. 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 1.01%, while Small cap index was up by 0.91%.

The top gaining sectoral indices on the BSE were Energy up by 1.56%, Consumer Durables up by 1.47%, Auto up by 1.45%, Realty up by 1.28% and Metal up by 1.20%, while Capital Goods down by 0.02% was the only losing index on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 5.33%, Tata Motors up by 4.52%, Bajaj Auto up by 2.96%, Reliance Industries up by 2.65% and Asian Paints up by 2.12%.

On the flip side, Power Grid down by 1.50%, Maruti Suzuki down by 1.04%, SBI down by 0.85%, Larsen & Toubro down by 0.46% and Kotak Mahindra Bank down by 0.27% were the top losers.

Meanwhile, following the unexpectedly weak Gross Domestic Product (GDP) growth in the April-June quarter of fiscal year 2017-18, global ratings agency, Fitch Ratings in its latest report has trimmed its forecast for India’s economic growth in 2017-18 by half a percentage point to 6.9% from its earlier projection of 7.4%. However, it expects the economic activity to accelerate in the second half of the fiscal year with the waning impact of one-off events including the demonetisation shock in late 2016 and the Goods and Services Tax (GST) rollout in July, which had dampened growth in the short term.

The ratings agency in its latest Global Economic Outlook (GEO) has said that the large stock of non-performing loans on bank balance sheets could, however, dampen the outlook for credit growth and business investment. It also said that the global economy has improved markedly this year and is on course to recording its fastest expansion since 2010. Noting that consumption should drive the pick-up in growth, Fitch has forecasted acceleration in activity in the second half of the current fiscal. Besides, global growth has been upgraded to 3.1% in 2017 from 2.9% in June, and 2018 growth has been upgraded to 3.2% from 3.1%.

The report further stated that motorcycle sales, a good indicator of rural household consumption, have gained strong momentum, bouncing back in July and August after having fallen sharply in 1H17(first half of 2017).  Investment is also expected to tick up in the quarters ahead, in part bolstered by ramped-up public sector infrastructure spending. However, it added that monetary policy loosening has taken place in the context of rapidly falling inflation, implying that the RBI’s policy stance as measured by the real policy rate has not been so accommodative.

The CNX Nifty is currently trading at 9850.55, up by 61.95 points or 0.63% after trading in a range of 9831.05 and 9895.40. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 4.53%, GAIL India up by 3.70%, Bajaj Auto up by 2.95%, Reliance Industries up by 2.82% and Bharti Infratel up by 2.51%.

On the flip side, Power Grid down by 1.71%, Maruti Suzuki down by 1.10%, SBI down by 0.89%, IndusInd Bank down by 0.55% and UPL down by 0.49% were the top losers.

The Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 2.81 points or 0.16% to 1,757.59, Taiwan Weighted increased 17.04 points or 0.16% to 10,482.20, Jakarta Composite increased 19.32 points or 0.33% to 5,933.35, Nikkei 225 increased 183.7 points or 0.9% to 20,584.48 and Hang Seng increased 466 points or 1.69% to 28,020.30.

The markets in South Korea and China are closed on account of National holiday.