Benchmarks hit record high on positive macro data

Indian equity benchmarks started the Diwali week on a very strong note, with Sensex and Nifty hitting all time highs and ending above their crucial 32,600 and 10,200, respectively for the first time ever. Markets started the trade with gap-up opening, as sentiments remained jubilant with report that India’s exports recorded a robust growth of 25.67 percent to $ 28.61 billion in September, mainly on account of rise in shipments of engineering, chemicals, and petroleum products. Imports too rose by 18.09 percent to $ 37.59 billion in September from $ 31.83 billion in the year-ago month and the trade deficit narrowed to 7-month low of $ 8.98 billion in the month under review from $ 9.07 billion in September 2016. Some support also came with IMF chief Christine Lagarde’s statement, who just days after the International Monetary Fund (IMF) slashed India’s GDP growth rate to 6.7 percent in 2017, slower than the 7.2% it had forecast in April, said that the Indian economy is on a firm footing.

Traders booked most of their initial gains in afternoon session, but fresh amount of buying in late trade helped markets to end near intraday high levels. Sentiments turned positive with data showing that India’s annual wholesale price inflation (WPI) eased to 2.60% in September from the provisional 3.24% in the previous month. Build up inflation rate in the financial year so far was 0.97% compared to a build up rate of 3.44% in the corresponding period of the previous year. Adding to the optimism, Niti Aayog Vice Chairman Rajiv Kumar said that slowdown in India's economic growth that began in 2013-14 has bottomed out and Gross Domestic Product (GDP) is likely to grow 6.9 to 7 percent in the fiscal 2017-18 and 7.5 percent in 2018-19. Traders also took some support with the private report indicating that India’s economy will grow by more than 10% annually in the coming decade, buoyed by demographics, reforms and globalization.

Firm opening in European counters too aided sentiments, as investors gear up for the latest in political news coming out of Austria, Spain and the UK. Euro zone’s trade surplus shrank in August as the stronger euro fueled an import boom that was only partly offset by a rise in exports. Asian markets ended mostly in green terrain on Monday, as commodity prices advanced. China’s producer price inflation unexpectedly accelerated to a six-month high in September as a construction boom shows no signs of abating.

Back home, investors took note of a poll report that the Nifty50 which rose to a fresh record high just ahead of Diwali week may come under pressure and could well move below 10,000 by December 2017. There is a sense of caution as valuations remain high and the recent macro data is raising questions on the stable macro picture which India had among other key emerging markets. Meanwhile, Godrej Agrovet made a stellar debut today and went home with a gain of around 30% on BSE, the initial public offer was oversubscribed 95.41 times.

Finally, the BSE Sensex surged 200.95 points or 0.62% to 32,633.64, while the CNX Nifty was up by 63.40 points or 0.62% to 10,230.85.

The BSE Sensex touched a high and a low of 32,687.32 and 32,445.43, respectively and there were 21 stocks on gaining side as against 9 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.52%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Telecom up by 4.23%, Metal up by 2.02%, Healthcare up by 1.24%, TECK up by 1.23% and Auto was up by 1.19%, while Power down by 0.13% was the lone losing index on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.96%, Tata Motors - DVR up by 3.22%, Mahindra & Mahindra up by 3.08%, Tata Motors up by 2.85% and Hindustan Unilever up by 2.63%. On the flip side, Axis Bank down by 1.65%, Wipro down by 0.62%, Maruti Suzuki down by 0.31%, NTPC down by 0.28% and Adani Ports & SEZ down by 0.26% were the top losers.

Meanwhile, Niti Aayog Vice Chairman Rajiv Kumar has said that slowdown in India's economic growth that began in 2013-14 has bottomed out and Gross Domestic Product (GDP) is likely to grow 6.9 to 7 percent in the fiscal 2017-18 and 7.5 percent in 2018-19. He indicated that the country’s GDP growth rate slumped to 7.1 percent in FY17, the year in which 87 percent of the currency was demonetised, despite a very good show by the agricultural sector. He also noted that on a quarterly basis the growth rate slipped to a three-year low of 5.7 percent in the Q1 (April-June) 2017-18.

Kumar said 'I think by the time you come to the first quarter of 2018, you will see a stronger recovery, and fiscal 2018-19 will be the much better year than fiscal 2017-18. And that will then continue because it will on much more sustained basis.' He also pointed out that the country did very well from 2007-13 and the downward cycle started in 2013-14, largely due to spurge in lending to undeserving projects since 2007.

Niti Aayog Vice Chairman further observed that the high economic growth between 2007-13 was on the basis of huge increase in loans and spurge in private debt for which there was zero control and that was given by the banking sector to the most undeserving cases (projects) and on completely false assumptions. Noting that growth stalled after 2013 because of policy stance, he said that as soon as that happened, all the debt began to becoming bad and therefore downward spiral started. 

The CNX Nifty traded in a range of 10,242.95 and 10,175.10. There were 34 stocks in green as against 16 stocks in red on the index.

The top gainers on Nifty were Bharti Airtel up by 6.06%, Vedanta up by 4.23%, Bharti Infratel up by 3.90%, Mahindra & Mahindra up by 3.15% and Tata Motors up by 2.99%. On the flip side, Bajaj Finance down by 3.61%, Axis Bank down by 2.02%, Indusind Bank down by 1.68%, Asian Paints down by 0.45% and Adani Ports & SEZ down by 0.43% were the top losers.

European markets were trading in green; France’s CAC rose 4.53 points or 0.08% to 5,356.27, UK’s FTSE 100 increased 5.75 points or 0.08% to 7,541.19 and Germany’s DAX was up by 19.42 points or 0.15% to 13,011.29.

The Asian markets made mostly a positive close on Monday as commodity prices advanced, though Hang Seng led the gainers, Japanese market too remained in jubilant mood since morning, hitting a fresh 21-year high and ending up by around half a percent, as yen stayed flat against the dollar amid expectations that Shinzo Abe will win another majority in the House of Representatives election held on Sunday. Traders got some encouragement with finance ministers from around the world expressed their desire for lower interest rates at a weekend meeting of the International Monetary Fund. However, the Chinese shares ended slightly lower even as inflation figures matched forecasts and People's Bank of China Governor Zhou Xiaochuan said the economy is set to achieve 7 percent growth in the second half of the year on rapid growth in household consumption.