Post Session: Quick Review

Indian equity benchmarks traded on a firm note for most part of the day and ended the session with gains of more than three tenth of a percent. The benchmarks made a positive start in early deals as sentiments were up-beat with the Nikkei India Services Purchasing Managers’ Index which 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 in today’s trade 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. Aviation stocks like Jet Airways, InterGlobe Aviation and SpiceJet closed in green on 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.

On the global front, Asian markets closed mostly in green. 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. The European markets were trading mostly in green. The UK services sector expanded at a faster rate than expected in October, easing concerns over the economy and showing a positive start to the fourth quarter.

Back home, select 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.

The BSE Sensex ended at 33700.71, up by 127.49 points or 0.38% after trading in a range of 33531.94 and 33715.63. There were 17 stocks advancing against 14 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.13%, while Small cap index was up by 0.48%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 1.22%, Industrials up by 1.07%, Bankex up by 1.05%, PSU up by 0.75% and Basic Materials up by 0.30%, while Healthcare down by 0.61%, Telecom down by 0.60%, Utilities down by 0.52%, Power down by 0.29% and Oil & Gas down by 0.10% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 3.52%, Tata Motors up by 2.99%, Tata Motors - DVR up by 2.40%, Axis Bank up by 1.96% and Larsen & Toubro up by 1.92%. (Provisional)

On the flip side, Power Grid down by 2.05%, Sun Pharma down by 2.00%, Hero MotoCorp down by 1.22%, Coal India down by 1.10% and Lupin down by 0.96% were the top losers. (Provisional)

Meanwhile, India's headline services index expanded further in the month of October on the back of rise in output activity. Even as the input price pressures intensified, greater inflows of new business and increasing backlogs of work at service providers also helped the index to move upwards.

The seasonally adjusted Nikkei Services Business Activity Index surged to 51.7 in October from 50.7 in September, posting above the neutral 50.0 threshold for the second consecutive month. The Nikkei India Composite PMI Output Index which measures both manufacturing and services too rose to 51.3 in October from 51.1 in September, signaling slight rate of expansion.

As per the survey report, firm raised staffing levels for the second consecutive month on account of increased capacity pressures, however the job creation rate slowed from the preceding month. The report further noted that the service providers exhibited optimism towards the coming 12-month outlook for activity, despite levels of business confidence dipping to the weakest since June.

On the inflation front, input cost inflation accelerated in October month, by rising at the joint-fastest pace since April 2016 whilst firms raised output charges.  At the sector level, the sharpest rise in input prices was noted in Consumer Services, followed by Real Estate & Business Services. In the manufacturing industry, purchase price inflation accelerated to the fastest pace since May and the companies raised their output prices to pass on higher input costs to clients.

The CNX Nifty ended at 10456.70, up by 32.90 points or 0.32% after trading in a range of 10403.60 and 10461.70. There were 22 stocks advancing against 28 stocks declining on the index. (Provisional)

The top gainers on Nifty were SBI up by 3.72%, Tata Motors up by 3.20%, IndusInd Bank up by 2.93%, ONGC up by 2.21% and Larsen & Toubro up by 2.14%. (Provisional)

On the flip side, Power Grid down by 2.30%, Sun Pharma down by 2.29%, BPCL down by 1.72%, Coal India down by 1.51% and GAIL India down by 1.48% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 16.16 points or 0.21% to 7,571.48, Germany’s DAX increased 42.94 points or 0.32% to 13,483.87, while France’s CAC decreased 0.52 points or 0.01% to 5,509.98.

Asian equity markets ended mostly higher on Friday even as Chinese markets came under selling pressure amid anaemic growth in the nation’s service sector in October heightened worries about an economic slowdown. Underlying sentiments remained supported somewhat after the release of US tax reform bill as well as the announcement of Jerome Powell as the next Federal Reserve Chair. Investors attention shifted to the all-important US jobs report due tonight, with US employment expected to jump by 312,000 jobs in October after unexpectedly dipping by 33,000 jobs in September. The unemployment rate is expected to hold at 4.2 percent. The Japanese markets were closed for the Culture Day holiday.