Markets extend northward journey for fifth straight day

Extending their northward journey for fifth straight session, Indian equity benchmarks ended the Wednesday’s trade with a gain of around quarter a percent. Despite some hiccups in first half of the session, markets traded with traction for most part of the day with traders taking some support with report that GST tax returns filed increased. Filings of the summary returns GSTR-3B - with which the tax needs to be paid or nil liability claimed - have increased over the months since July. Till the August 20 deadline for filing GSTR-3B for the month of July without fine, 34 lakh returns were filed; the returns filed before the respective deadline for September was higher at 39.4 lakh and the number for October grew further to 43.7 lakh. Some support also came with report that earnings of companies in the September quarter surprised investors and analysts, who almost doubled their upgrade ratings on the stocks they cover after the results.

The sentiments also remained positive with ICRA’s report highlighting that the economic expansion in terms of gross value added (GVA) is expected to improve to 6.3% in the three months to September from 5.6% in the previous quarter, on the back of a rise in industrial growth. Headline GVA growth, however, is likely to trail the 6.8% recorded in the second quarter of FY17. Investors also took some comfort with the report that the government has set up a 14-member panel to identify and suggest ways to address issues faced in implementation of the law. Meanwhile, the Cabinet approved a policy framework for central public sector enterprises (CPSEs) to negotiate the next round of wage revision with their workers. However, gains remained capped, as investors took note of a report that S&P said India’s activity indicator looks lackluster indicating they might not barge on the BBB- rating on India any time soon.

Weakness in European counters too capped the up-side in domestic markets on concerns over political tensions in Germany and ahead of the presentation of the latest UK budget due later in the day. Asian markets closed in green, as globally investors await the minutes of recent Federal Reserve policy meeting due later today. The Bank of Japan is dropping subtle, yet intentional, hints that it could edge away from crisis-mode stimulus earlier than expected, through a future hike in its yield target.

Back home, stocks related to auto sector remained in focus, as highlighting auto industry’s quick revival from the negative impact of note ban, global ratings agency, Fitch Ratings in its latest report said that Indian passenger vehicles (PV) and two-wheelers sales are likely to continue growing in high single digits in the near term, backed by sustained low cost of ownership and healthy rural spending due to good monsoons and higher public-sector wages. Shares of public sector remained buzzing in today’s trade as investors reacted to Cabinet’s actions. The Cabinet had cleared an ordinance for changes to Insolvency and Bankruptcy Code (IBC). However, telecom stocks remained under pressure despite the Telecom Regulatory Authority of India (TRAI) recommending the removal of the intra-band cap of 50% spectrum holding by operators in a circle. Mixed reactions were displayed in leather stocks with most of them losing their early gains on report that the Cabinet Committee has deferred incentive package for the industry. The Union Cabinet was expected to soon take a decision on Rs 2,600 crore incentive package for the labour-intensive leather and footwear sector to boost exports and job creation.

Finally, the BSE Sensex gained 83.20 points or 0.25% to 33,561.55, while the CNX Nifty was up by 15.40 points or 0.15% to 10,342.30.

The BSE Sensex touched a high and a low of 33,654.53 and 33,465.23, respectively and there were 15 stocks on gaining side as against 16 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index slipped 0.05%, while Small cap index was up by 0.23%.

The top gaining sectoral indices on the BSE were Industrials up by 0.47%, Consumer Discretionary Goods & Services up by 0.37%, Auto up by 0.30%, PSU up by 0.29% and Utilities was up by 0.16%, while Telecom down by 1.15%, Metal down by 0.66%, Healthcare down by 0.52%, Consumer Durables down by 0.26% and Energy was down by 0.19% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports up by 3.27%, HDFC up by 1.53%, SBI up by 1.35%, Asian Paints up by 1.27% and Maruti Suzuki up by 1.08%. On the flip side, Axis Bank down by 1.23%, Dr. Reddy’s Lab down by 1.23%, Lupin down by 1.15%, Bharti Airtel down by 0.88% and NTPC down by 0.74% were the top losers.

Meanwhile, domestic rating agency, ICRA in its latest report has said that India's economic growth rate in terms of Gross Value Added (GVA) is expected to improve to 6.3% in July-September quarter (Q2FY18) from 5.6% in the first quarter of FY18, on the back of a broad-based pickup in industrial growth, even as agriculture, forestry and fishing and services are likely to moderate. However, it noted that headline GVA growth is likely to trail the 6.8% recorded in the Q2FY17. 

As per the report, industrial growth improved to over 5.8% in Q2 from 1.6% in the first quarter. It said that improved corporate earnings, partly reflecting milder discounts and higher commodity prices, and a pick-up in mining and electricity, are expected to contribute to a sequential recovery in GVA growth in Q2FY18, offsetting the moderation in government spends and a tepid kharif harvest for several crops. It also pointed out that the significant turnaround in mining, a favourable base-effect, and supportive commodity prices, should boost mining and quarrying sub-sectors to a healthy 7.5% in the quarter. It added that electricity generation also recorded an improvement led by the thermal segment.

However, the rating agency said that the activity in the real estate sector remains subdued on account of weak consumer sentiment, led by factors such as the note-ban-led drag, full implementation of the Real Estate (Regulation and Development) Act and Goods and Services Tax (GST) regime. It pointed that this will cap construction sector remaining low at near 2.5% in the quarter.  It also expects that growth in the services sector to ease to 7.3% in Q2 from 8.7% in the first quarter.

The report further mentioned that government's non-interest revenue spend slid sharply to 0.8% in Q2 from 26.8% in Q1, reflecting the waning effect of front-loading of spending. However, it noted that available data for 12 states indicates a pickup in their revenue spend increased to 14.1% in Q2 from 10.7% in Q1. It also expects that GVA growth in public administration and defence to ease to around 6.3% from 9.5% in Q1, weighing upon the overall GVA expansion.

The CNX Nifty traded in a range of 10,368.70 and 10,309.55. There were 23 stocks in green as against 27 stocks in red on the index.

The top gainers on Nifty were Zee Entertainment up by 3.78%, Adani Ports up by 3.28%, GAIL India up by 2.20%, Ambuja Cement up by 1.97% and Ultratech Cement up by 1.57%. On the flip side, Tech Mahindra down by 2.28%, Bajaj Finance down by 1.99%, Hindalco down by 1.74%, Dr. Reddy’s down by 1.47% and Bharti Infratel down by 1.45% were the top losers.

European markets were trading mostly in red; Germany’s DAX decreased 33.01 points or 0.25% to 13,134.53 and France’s CAC was down by 1.07 points or 0.02% to 5,365.08, while UK’s FTSE 100 was up by 19.45 points or 0.26% to 7,430.79.

Asian equity markets ended in green on Wednesday after the major US averages hit fresh record closing highs overnight, buoyed by upbeat corporate earnings results and higher commodity prices. Investors remained focused on the minutes from the latest Fed and ECB meeting due today and tomorrow, respectively. Japanese shares ended higher, buoyed by gains in large-cap stocks such as SoftBank and Fanuc, and financial companies as global growth hopes lifted the mood across world markets. Further, Chinese shares ended higher, underpinned by robust gains in banking and energy shares, while those in the defensive consumer and healthcare sectors paused for a breath after recent gains. Meanwhile Hong Kong's Hang Seng index ended above 30,000 points for the first time in 10 years, amid signs Chinese investors are stepping up buying of Hong Kong stocks.