Benchmarks continue firm trade; Nifty holds 9,900 mark

Indian equity benchmarks continued their firm trade in morning session on account of buying in front line blue chip counters. The rupee opened higher against dollar ahead of the Reserve Bank of India’s (RBI’s) fourth bi-monthly policy review for 2017-18 due later in the day. Foreign Portfolio Investors sold shares worth Rs 1,473.09 crore in the previous trading session with gross purchases and gross sales stood at Rs 4,944.77 crore and Rs 6,417.86 crore, respectively. Traders took encouragement from the core sector data, comprising eight infrastructure segments, which saw a 4.9% rise in output in August compared with 2.6% in July. The growth was driven largely by a sharp rise in coal and electricity output and wasn’t evenly spread. Crude oil, cement and fertiliser declined. Some support also came on a foreign brokerage report that a majority 77% of the mid market enterprises (MMEs) in the country are confident about the domestic economy and expect higher revenue growth compared to their global peers.

Separately, the government sees the decline in growth as a hiccup and expects the economy to pick up pace in the fiscal second quarter as teething troubles with GST get resolved and the effect of demonetization wanes. The latest high-frequency indicators such as commercial vehicles sales, core sector growth and manufacturing PMI bolster this contention. Finance secretary Ashok Lavasa enlightened that the economy is going through a phase of readjustment to a system of formalization that entails greater tax compliance and transparency in financial transactions. Investors took note that the RBI is scheduled to release its fourth bi-monthly monetary policy statement for 2017-18 today. All stakeholders -- especially the industry which has been demanding lower interest rates-- have been keenly awaiting this. Bankers, however, are of the view that the RBI would maintain status quo as inflation has risen.

Traders were seen piling up position in Healthcare, Energy and Oil & Gas stocks, while selling was witnessed in Telecom, Metal and TECK sector stocks. In scrip specific development, Natco Pharma is locked at percent upper circuit on the back of USFDA approval for Glatiramer Acetate Injection. The company’s marketing partner Mylan has received US Food and Drug Administration (USFDA) approval for Glatiramer Acetate Injection in strengths of 40 mg/mL and 20 mg/mL. Oil marketing companies (OMCs) Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) were trading in green after the government reduced the basic excise duty on petrol and diesel (both branded and unbranded) by Rs 2 a litre with effect from October 4, 2017.

On the global front, Asian markets were trading in green, with the Chinese central bank’s weekend move to free up more liquidity boosting sentiment as the world’s second-largest economy grows at a steady pace. Japan’s services sector expanded in September at the slowest rate in 11 months as the pace of new orders eased, though a raft of other data suggest the economic recovery remains intact even as momentum may have ebbed slightly in the third quarter. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,600 and 9,900 levels respectively. The market breadth on BSE was positive in the ratio of 1428:692, while 92 scrips remained unchanged.

The BSE Sensex is currently trading at 31649.70, up by 152.32 points or 0.48% after trading in a range of 31457.78 and 31675.41. 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 0.64%, while Small cap index was up by 0.81%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.60%, Energy up by 1.07%, Oil & Gas up by 0.97%, FMCG up by 0.94% and Realty up by 0.72%, while Telecom down by 0.31%, Metal down by 0.06% and TECK down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.59%, Power Grid up by 1.48%, ITC up by 1.43%, Asian Paints up by 1.42% and Reliance Industries up by 1.40%.

On the flip side, Bharti Airtel down by 1.21%, ICICI Bank down by 0.50%, Coal India down by 0.46%, Tata Steel down by 0.41% and NTPC down by 0.21% were the top losers.

Meanwhile, to moderate the relentless rise in fuel prices witnessed for the last couple of months, the government has reduced basic excise duty rate on both branded and unbranded petrol and diesel by Rs 2 per litre. The revised prices will be applicable with effect from October 4. As per the Finance Ministry, the measure has been taken to cushion the impact of rising international prices of crude petroleum oil, petrol and diesel on their retail sale prices. The finance ministry further said that the rise in the prices of petrol and diesel was reflected in Wholesale Price Index-based inflation, which rose 3.24 per cent in August, as compared to 1.88 per cent in July, prompting the government to reduce duty.

The unbranded petrol currently commands a basic excise duty of Rs 8.48 per litre, special additional excise duty of Rs 7 a litre and additional excise duty of Rs 6. The total excise incidence on branded petrol is Rs 22.66 per litre with basic excise duty charged at higher rate of Rs 9.66, while unbranded diesel attracts basic excise duty of Rs 10.33 per litre, special additional excise duty of Re 1 and additional excise duty of Rs 6 per litre. Branded diesel attracts Rs 12.69 per litre basic excise duty, Re 1 a lire additional excise duty and Rs 6 special additional excise duty. Besides the excise duty, state governments levy the value-added tax in the range of 25-40 per cent on petrol and 15-25 per cent on diesel.

Revenue loss on account of these reductions in excise duty is about Rs 26,000 crore in full year and Rs 13,000 crore in remaining part of current financial year. The government had between November 2014 and January 2016, raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.

The CNX Nifty is currently trading at 9911.25, up by 51.75 points or 0.52% after trading in a range of 9850.65 and 9916.05. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.74%, Aurobindo Pharma up by 1.97%, Indiabulls Housing Finance up by 1.86%, HPCL up by 1.85% and Yes Bank up by 1.60%.

On the flip side, Bharti Airtel down by 0.95%, Coal India down by 0.57%, ICICI Bank down by 0.52%, Tata Steel down by 0.45% and Zee Entertainment down by 0.33% were the top losers.

The Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 0.44 points or 0.03% to 1,760.11, Jakarta Composite increased 20.76 points or 0.35% to 5,960.22, Nikkei 225 increased 36.71 points or 0.18% to 20,650.78 and Hang Seng increased 213.41 points or 0.76% to 28,386.62.

The markets in South Korea, China and Taiwan are closed on account of national holiday.