Benchmarks extend gains; Nifty above 10,150 mark

Indian equity benchmarks extended their gains and were trading near the highest point of the day in morning session on account of buying in front line blue chip counters. The rupee opened higher against dollar on account of continued selling of greenback by banks and exporters. Foreign Portfolio Investors stood net buyers in domestic equity markets as they bought shares worth Rs 869.54 crore with gross purchases and gross sales stood at Rs 6,411.40 crore and Rs 5,541.86 crore, respectively. The street is eyeing Reliance Industries (RIL) second-quarter earnings that will include the financials of its telecom venture for the first time. With improved realizations in most petroleum products including petrol, diesel and aviation turbine fuel, RIL’s GRM is expected to widen to $12.5 per barrel in the September quarter from $11.9 in the previous quarter.

Traders took encouragement with India’s industrial production growth accelerated to a nine-month high of 4.3% in August as against 4% in the same month previous year and 1.2% in July 2017, as companies stepped up production to restock warehouses ahead of the festival season after they reduced output in June and July, owing to uncertainties regarding implementation of the goods and services tax (GST). Robust performance of mining and power sectors coupled with higher capital goods output also supported the growth. The previous high in IIP growth was recorded at 5.7% in November 2016. Separately, the statistics office said that inflation based on the Consumer Price Index (CPI) was at 3.28% in September, unchanged from August. Some support also came after the World Bank chief said that the reforms undertaken by Prime Minister Narendra Modi have been significant and the results would be reflected in the mid and long-term growth figures, days after the global lender forecast that India’s GDP may slowdown to 7% in 2017.

Investors took note of CRISIL’s report which highlighted that banks are likely to need nearly Rs 3.3 lakh crore this fiscal as provisioning for large NPA accounts in the current financial year. The report said with the economic value of assets underlying NPAs eroding with time, and resolutions are hard to come by, banks would need to step up on provisioning, mainly for large corporate NPAs. Telecom sector was buzzing after the Tata Group agreed to sell its mobile business to Bharti Airtel for free, ending the conglomerate’s long-standing attempts to rid itself of this loss-making venture while bolstering the market share and 4G airwaves capacity of the Sunil Mittal-led company. IT stocks were buzzing after industry body NASSCOM shifted the revenue projection for India’s Business Process Management (BPM) sector to $50-$55 billion by 2025 from the present target of $50 billion by 2020. It added that the revenue for India’s BPM sector is projected to increase from $30 billion in FY17 to $50-55 billion by 2025.

Traders were seen piling up position in Telecom, TECK and Metal stock, while selling was witnessed in FMCG, Utilities and Oil & Gas sector stocks. In scrip specific development, TCS, the country’s second-largest software exporter was trading in green on reporting 3.2% sequential growth to $4,739 million for the September 2017 quarter. The operating margin improved by 170 basis points to 25.1% after hitting the lowest level of 23.3% in the previous quarter since the March 2008 quarter. Select cigarette stocks were under pressure on report that cigarette sales volume will continue to be under pressure in India with government’s tough anti-smoking initiatives and a thriving grey market. The research agency estimates sales volume declined by 4% last year and poised to decline at a CAGR of 3% till 2021. 

On the global front, Asian markets were trading in green. China reported trade figures for September with the trade balance came in at a surplus of $28.08 billion, compared with a surplus of $39.05 billion seen and imports up 18.7%, compared to a 13.5% gain seen and exports posting an 8.1% rise, below the 8.8% increase expected. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 32,300 and 10,150 levels respectively. The market breadth on BSE was positive in the ratio of 1405:815, while 80 scrips remained unchanged.

The BSE Sensex is currently trading at 32392.96, up by 210.74 points or 0.65% after trading in a range of 32247.74 and 32398.17. 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 0.21%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Telecom up by 4.52%, TECK up by 1.31%, Metal up by 1.02%, Bankex up by 0.84% and IT up by 0.76%, while FMCG down by 0.22%, Utilities down by 0.06% and Oil & Gas down by 0.01% were the only losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 6.59%, Tata Steel up by 1.96%, ICICI Bank up by 1.46%, HDFC Bank up by 1.43% and Tata Motors up by 1.42%.

On the flip side, Dr. Reddy’s Lab down by 1.05%, NTPC down by 0.93%, ITC down by 0.75%, ONGC down by 0.38% and Maruti Suzuki down by 0.32% were the top losers.

Meanwhile, a day after the World Bank forecasted that India's GDP may slowdown from 8.6 per cent in 2015 to 7 per cent in 2017 because of disruptions by demonetisation and the GST, its chief has lauded the reforms undertaken by Prime Minister Narendra Modi and said that they have been 'significant' and the results would be reflected in the mid and long-term growth figures.

Jim Yong Kim, the World Bank chief said that “the reform process has been significant. We think that certainly in the medium and long term, the growth will reflect the seriousness of Prime Minister Modi's government in making those reforms.' He had recently said that the current slowdown in India's economic growth is short-term and an 'aberration' mainly due to the temporary disruptions in preparation for the GST.

He said that GST will be good for Indian economy 'Companies are waiting for it to stabilise before taking more action on investments and expansion' and added that the GST will boost growth as it will cut down delays in truck movement and integrate the country into a national market. He further said that 'Prime Minister Modi took a very different approach to the Doing Business report and took substantial reforms. We are very encouraged by this.' Kim said that economic growth in the medium and long term will reflect the progress from the reforms.

The CNX Nifty is currently trading at 10155.15, up by 58.75 points or 0.58% after trading in a range of 10120.10 and 10161.05. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 6.67%, Bharti Infratel up by 3.94%, Tata Steel up by 1.89%, ICICI Bank up by 1.55% and Ultratech Cement up by 1.54%.

On the flip side, GAIL India down by 1.37%, Dr. Reddy’s Lab down by 1.13%, Zee Entertainment down by 1.04%, NTPC down by 0.96% and ITC down by 0.77% were the top losers.

The Asian markets were trading in green; Shanghai Composite increased 4.27 points or 0.13% to 3,390.37, Hang Seng increased 4.38 points or 0.02% to 28,463.41, Jakarta Composite increased 8.63 points or 0.15% to 5,934.84, Nikkei 225 increased 240.35 points or 1.15% to 21,195.07, Taiwan Weighted decreased 12.3 points or 0.11% to 10,699.14, KOSPI Index decreased 3.26 points or 0.13% to 2,471.50 and FTSE Bursa Malaysia KLCI decreased 2.08 points or 0.12% to 1,751.92.