Benchmarks add strength; India services PMI rises in October

Indian equity benchmarks added gains and trade with modest gains in morning session on account of buying in frontline counters. The rupee opened up against dollar on account of selling of American currency by banks and corporates. Foreign Portfolio Investors stood net buyers in domestic equity markets on Thursday and bought shares worth Rs 1,046.75 crore with gross purchases and gross sales at Rs 6,128.05 crore and Rs 5,081.30 crore, respectively. Sentiments were up-beat as the Nikkei India Services Purchasing Managers’ Index rose to 51.7 in October from September’s 50.7 due to greater inflows of new business. The report enlightened that service providers retained an optimistic outlook regarding business activity over the coming 12 months, while the labor market was further reinforced as firms raised their payroll numbers over the month. Separately, former RBI governor Raghuram Rajan has termed the government’s announcement to infuse Rs 2.11 lakh crore in PSU banks as good news saying it is important for banks to have capital for lending going forward. He added that public sector banking system is a big part of Indian system and it is about 70%. More importantly it allows them to take tough decisions, which they could not earlier because they had limited capital. Rajan said the government’s decision to scrap old Rs 500/1000 notes on November 8, 2016 did effect economic activities.

Select auto stocks were buzzing on report that domestic commercial vehicle sales seems to be back on track since July 2017, driven by pent-up demand post-GST, healthy replacement-led demand, especially in the tractor trailer segment owing to stricter implementation of CMVR regulations and pick-up in construction and mining activity, driving demand for tipper trucks. IT stocks were buzzing with Nasscom’s President R Chandrashekhar’s statement that India’s IT industry could see an upturn next year as the process of investments in technology, particularly in the United States, has started to gather momentum. Aviation stocks like Jet Airways, InterGlobe Aviation and SpiceJet were trading in green with report that the government is developing a comprehensive 25-year master plan for airports in the country to keep pace with air traffic growth. Investors took note of the Reserve Bank of India (RBI) statement that corporate borrowers who fail to get a Legal Entity Identifier (LEI) number from banks won’t be given credit. The schedule for getting the LEI number is spread out till December 2019 and depends on exposure.

Traders were seen piling up position in Telecom, Capital Goods and Industrials stocks, while selling was witnessed in Healthcare and Energy sector stocks. In scrip specific development, Shriram City Union was trading in red after the company posted a decline of 3% in its net profit at Rs 198.30 crore for second quarter ended September of this fiscal. The company’s net profit stood at Rs 204.49 crore in the July-September quarter of the previous fiscal. Glenmark Pharmaceuticals was trading in red on reporting a 4.23% dip in its consolidated net profit to Rs 214.12 crore for the second quarter ended September 30, 2017. The company had posted a net profit of Rs 223.58 crore for the corresponding period of the previous fiscal.

On the global front, Asian markets were trading mixed. Activity picked up slightly in China’s services sector in October but growth remained modest and much weaker than historical trends. The Caixin/Markit services purchasing managers’ index (PMI) rose to 51.2 in October, up slightly from September’s 21-month low but suggesting only a subdued expansion in activity and new orders. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,600 and 10,400 levels respectively. The market breadth on BSE was positive in the ratio of 1355:930, while 95 scrips remained unchanged.

The BSE Sensex is currently trading at 33631.49, up by 58.27 points or 0.17% after trading in a range of 33531.94 and 33692.58. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.09%, while Small cap index was up by 0.63%.

The top gaining sectoral indices on the BSE were Telecom up by 1.38%, Capital Goods up by 0.81%, Industrials up by 0.62%, Basic Materials up by 0.56% and Metal up by 0.48%, while Healthcare down by 0.59% and Energy down by 0.05% were the only losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.18%, Axis Bank up by 1.71%, ONGC up by 1.52%, Larsen & Toubro up by 0.84% and Wipro up by 0.73%.

On the flip side, Power Grid down by 1.63%, Sun Pharma down by 1.28%, Lupin down by 1.11%, Coal India down by 0.53% and Hindustan Unilever down by 0.44% were the top losers.

Meanwhile, amid the process of investments in technology gathering momentum, the National Association of Software and Services Companies’ (NASSCOM’s) president R Chandrashekhar has said that India's Information Technology (IT) industry could see an upturn next year. He believes that the coming year could actually witness an upturn in the industry largely based on global economic trends, particularly in the United States.

Software services body NASSCOM’s president has said that the IT industry, as a whole, is on track to posting 7-8 percent growth in exports in the current fiscal and there is no case for revisiting those numbers as no new factor has emerged which warrants reconsideration. He added that the export growth projection for 2017-18 had taken into account all the changes in technology, global economics and global politics including political protectionism.

Chandrashekhar further stated that the process of investing in technology has sort of started picking up and this trend is actually expected to really consolidate in 2018. He said there are expectations of an upturn in BFSI (banking, financial services and insurance) segment in the US, greater investment in technology in that space and hardening of interest rates. The US accounts for more than 60 percent of Indian IT exports, and the BFSI segment accounts for a big chunk of that. So, these factors make Nasscom believe that they will be seeing an upturn in the year ahead.

The CNX Nifty is currently trading at 10440.70, up by 16.90 points or 0.16% after trading in a range of 10403.60 and 10461.70. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 2.13%, Yes Bank up by 1.75%, ONGC up by 1.65%, IndusInd Bank up by 1.54% and Axis Bank up by 1.52%.

On the flip side, Power Grid down by 1.74%, Sun Pharma down by 1.46%, Lupin down by 1.12%, BPCL down by 1.07% and Eicher Motors down by 1.00% were the top losers.

The Asian markets were trading mixed; FTSE Bursa Malaysia KLCI increased 1.21 points or 0.07% to 1,742.26, Taiwan Weighted increased 7.15 points or 0.07% to 10,795.66 and Hang Seng increased 96.94 points or 0.34% to 28,615.58.

On the other hand, Jakarta Composite decreased 38.3 points or 0.64% to 5,992.80, Shanghai Composite decreased 25.48 points or 0.75% to 3,357.83 and KOSPI Index decreased 1.33 points or 0.05% to 2,545.03.

Japan stock exchange was closed on account of National holiday.