Sensex, Nifty continue to trade modestly in green

Tracking mixed leads from Asian markets, Indian equity benchmarks continued to trade modestly in green in late morning session. Investors took support with NITI Aayog vice-chairman Rajiv Kumar’s statement that India GDP growth rate in Q2 is likely at 6.2-6.3% and for the full year could be closer to 7% and for Second-half growth has to be 7.5%. Some support also came with rating agency Moody's latest report which expecting an improvement in the credit profiles of India Inc next year, driven by better sales as it expects GST-related disruptions to wane, leading to an all-round recovery in economic activities. Meanwhile, the Union cabinet has cleared the ordinance for making changes to the Insolvency and Bankruptcy Code (IBC), to block potential loopholes in the new corporate turnaround regime and to ensure rescued companies remain in reliable hands. Moreover, all the sectoral indices were trading in green except banking, while the broader markets were trading better than larger peers. However, gains were limited with the private report stating that the trade deficit has ballooned to $88 billion between April and October, up 60 percent from the comparable period a year ago due to weak exports and a sharp rise in imports.

On the global front, Asian markets were trading mixed, with investors in the US markets going on a Thanksgiving holiday and the Fed minutes largely in line with investors expectations that the Fed will soon raise interest rates for a third time next month. Japan was closed on a holiday. Back home, in scrip specific development, Reliance Industries was trading higher after the company issued and allotted the sixth tranche of unsecured non-convertible redeemable debentures aggregating to Rs 2,500 crore, on private placement basis.

The BSE Sensex is currently trading at 33600.35, up by 38.80 points or 0.12% after trading in a range of 33522.07 and 33616.74. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.29%, while Small cap index was up by 0.85%.

The top gaining sectoral indices on the BSE were IT up by 1.14%, Telecom up by 1.03%, TECK up by 0.98%, Capital Goods up by 0.73% and Realty up by 0.63%, while Bankex down by 0.07% was the lone losing index on BSE.

The top gainers on the Sensex were Infosys up by 2.03%, Sun Pharma up by 1.25%, Bharti Airtel up by 1.18%, Hero MotoCorp up by 0.71% and ONGC up by 0.69%. On the flip side, Dr. Reddy’s Lab down by 1.62%, Adani Ports & SEZ down by 1.27%, Asian Paints down by 0.76%, Kotak Mahindra Bank down by 0.61% and NTPC down by 0.50% were the top losers.

Meanwhile, days after upgrading India’s sovereign rating to Baa2 from Baa3 with a stable outlook, global credit rating agency Moody's Investors Services in its latest report has stated that Indian companies will see an improvement in its credit profile in the year 2018, on the back of better sales as it expects Goods and Services Tax (GST)-related activity disruption to diminish, leading to an all over recovery in economic activities. Besides, it noted that refinancing needs in 2018 would be manageable for most companies, given their improving access to capital markets and their large cash balances. It also said that corporates’ cross-border bond maturities will also be manageable for the next three years.

The rating agency in its report titled ‘Non-financial corporates—India, 2018 Outlook’ expects that the country’s Gross domestic product (GDP) growth of around 7.6 percent will result in higher sales volumes, which, along with new production capacities and benign commodity prices, will support an EBITDA (earnings before interest, taxes, depreciation and amortisation) growth of 5-6 percent over next 12 to 18 months. Adding further, it said that a further simplification of GST and other structural reforms, or an improvement in commodity prices, resulting in higher operating profit could further improve companies’ credit profiles. Apart from this, it noted that an improvement in asset valuations, providing a means of deleveraging for some corporates will also result in improvement in their credit profiles.

However, the report warned that downside risks could include GDP growth falling below 6 percent and weakening of commodity prices, resulting in lower pre-tax growth. It also warned that slowdown in pace of reforms, political uncertainty, higher interest rates brought on by rising inflation and exchange-rate volatility, resulting in a tight funding environment may also impact firms’ credit profiles. The agency has stable outlook for oil companies, real estate, auto and auto suppliers and IT services. But, it is negative on the telecom sector as it expects the increasing competition to continue to pressure revenue and margins over the next 12 months, while industry consolidation will result in the emergence of three big players.

The CNX Nifty is currently trading at 10355.75, up by 13.45 points or 0.13% after trading in a range of 10331.30 and 10366.95. There were 26 stocks advancing against 23 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Bharti Infratel up by 1.90%, Tech Mahindra up by 1.86%, Infosys up by 1.84%, Bharti Airtel up by 1.43% and HCL Tech. up by 1.22%. On the flip side, Dr. Reddy’s Lab down by 1.69%, Adani Ports & SEZ down by 1.50%, Hindalco down by 1.03%, Asian Paints down by 0.99% and Indiabulls Housing Finance down by 0.78% were the top losers.

Asian markets were trading mixed; FTSE Bursa Malaysia KLCI increased 0.13 points or 0.01% to 1,723.67, Hang Seng increased 26.72 points or 0.09% to 30,030.21 and Taiwan Weighted increased 30.97 points or 0.29% to 10,853.56.

On the flip side, Shanghai Composite decreased 33.76 points or 0.98% to 3,396.71, Jakarta Composite decreased 6.95 points or 0.11% to 6,062.83 and KOSPI Index decreased 0.37 points or 0.01% to 2,540.14.