Benchmarks continue firm trade; Nifty holds 10,000 mark

Indian equity benchmarks continued their firm trade in morning session on account of buying in front line blue chip counters. Sentiments remained upbeat after the government’s revenue collection during April-September, the first half of fiscal year 2017-18 has shown a healthy growth. For the period, direct tax collections, which comprise personal income and corporate tax, stood at Rs 3.86 lakh crore, registering a growth of 15.8 percent higher than the net collections for the corresponding period of last year, mainly on account of a healthy growth in advance tax mop-up.  Some support also came with finance minister Arun Jaitley’s statement that the series of reforms like demonetization and Goods and Services Tax (GST) has put Indian economy on a far stronger track. Jaitley added that these are structural changes. And these structural changes, I think have put the Indian economy on a far more sound track so that we can look forward for a much cleaner much bigger India economy in the days and years to come.

Investors took note that the recently constituted Economic Advisory Council to the Prime Minister (EAC-PM) has identified 10 priority areas for accelerating economic growth and employment over the next six months, with greater last mile connectivity. The 10 themes are economic growth, employment and job creation, informal sector and integration, fiscal framework, monetary policy, public expenditure, institutions of economic governance, agriculture and animal husbandry, patterns of consumption and production and social sector. Banking stocks were under pressure after a recent study of International Monetary Fund Financial showed that Indian banking sector was vulnerable given that large segments have low profitability and have large problem loans. The IMF said a combination of weak banks and corporates leaves India vulnerable to a tightening in the global financial conditions, as it pressed for more steps to ensure good capitalization in public sector banks.

Traders were seen piling up position in Realty, Metal and FMCG sector stocks.  In scrip specific development, Sun Pharmaceutical Industries was trading in green as the company received an Establishment Inspection Report (EIR) from the US Food Drug and Administration (USFDA) in respect of Dadra facility based upon its responses to the observation letter. Mixed reactions were witnessed in telecom stocks on report that the Telecom Commission’s recent move to extend the tenure of payments for auctioned airwaves will improve telcos’ cash flows over the next 6-7 years, but the industry said it will still end up paying nearly an additional Rs 30,000 crore to the government as the payouts will continue for a much longer span.

On the global front, Asian markets were trading mostly in green. Japanese wholesale prices rose in September at the fastest annual pace in almost nine years due to rising prices for gasoline, metals, and agricultural products, but the gains won’t necessarily boost the country’s notoriously weak inflation. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,900 and 10,000 levels respectively. The market breadth on BSE was positive in the ratio of 1521:656, while 81 scrips remained unchanged.

The BSE Sensex is currently trading at 31941.89, up by 107.90 points or 0.34% after trading in a range of 31813.67 and 31954.72. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.45%, while Small cap index was up by 0.77%.

The top gaining sectoral indices on the BSE were Realty up by 1.15%, Metal up by 1.13%, FMCG up by 0.98%, Telecom up by 0.91% and Utilities up by 0.85%, while there were no losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.95%, Hindustan Unilever up by 1.77%, NTPC up by 1.52%, Reliance Industries up by 1.33% and Tata Steel up by 1.10%.

On the flip side, Bharti Airtel down by 1.30%, Asian Paints down by 0.78%, Coal India down by 0.76%, Infosys down by 0.60% and Tata Motors down by 0.55% were the top losers.

Meanwhile, amid the speculation of the government announcing stimulus measures to boost growth, the newly constituted Economic Advisory Council to the Prime Minister (EAC-PM) in its first meeting wants the government to stick to its fiscal consolidation road map and has suggested that stimulus to the industry should not be at the cost of fiscal prudence. The EAC-PM which is headed by Bibek Debroy said that ' There is a consensus (among the members)... That the fiscal consolidation exercise should not be deviated.' The government has pegged the fiscal deficit target at 3.2 per cent for the current fiscal and 3 per cent for the next financial year.

The council identified ten themes, around which its report would be structured, the themes identified are economic growth, employment and job creation, informal sector and integration, fiscal framework, monetary policy, public expenditure, institutions of economic governance, agriculture and animal husbandry, patterns of consumption and production and social sector.

The council also recommended the need for effective tracking of key economic parameters through possible mechanisms for instituting an economy track monitor for action based on informed assessment and analysis. Debroy further said that there is a consensus among us about the various reasons that have contributed to the slowdown in the growth rate and the Council will provide specific recommendations that can be implemented in near term.

The CNX Nifty is currently trading at 10023.85, up by 39.05 points or 0.39% after trading in a range of 9977.10 and 10027.95. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 4.35%, Hindalco up by 3.73%, Aurobindo Pharma up by 2.01%, Sun Pharma up by 1.89% and Hindustan Unilever up by 1.79%.

On the flip side, Ultratech Cement down by 1.31%, Bharti Airtel down by 1.25%, Asian Paints down by 0.93%, Cipla down by 0.72% and Tata Motors down by 0.64% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 12.57 points or 0.51% to 2,470.73, Jakarta Composite increased 31.53 points or 0.54% to 5,914.32, Taiwan Weighted increased 55.45 points or 0.52% to 10,696.64, Nikkei 225 increased 98.78 points or 0.47% to 20,980.05 and Hang Seng increased 103.96 points or 0.37% to 28,493.53.

On the other hand, Shanghai Composite decreased 5.82 points or 0.17% to 3,382.46 and FTSE Bursa Malaysia KLCI decreased 4.2 points or 0.24% to 1,753.01.