Markets stage splendid recovery to end marginally in green

Recovery which emerged in last leg of trade mainly helped Indian equity benchmarks to end slightly in green terrain on Monday. Markets made a negative start to the crucial week of F&O expiry and traded mostly in red throughout the session, as traders remained on sidelines ahead of GDP and PMI data for the manufacturing sector due later this week. Sentiments also remained dampened with Standard & Poor’s decision of retaining its sovereign rating for India at BBB- with a stable outlook, dashing hopes of another upgrade after rival Moody’s lifted its rating by a notch after a gap of nearly 14 years. Traders also remained concerned with industry body Assocham’s statement that inflation would remain a key concern for the RBI and the government, dimming hopes of a cut in interest rates. The chamber observed that as uncertainty and apprehension loom over crude oil prices and vegetables, mainly on the back of rising retail prices of onion and tomatoes, it is disrupting household budgets.

However, markets took U-turn from intraday lows in final hour of trade and staged splendid recovery to enter into green, as traders took some solace with Niti Aayog Vice Chairman Rajiv Kumar’s statement that the time has come for consolidation of reforms, including GST, bankruptcy code and benami law, initiated by the Modi government in the last 42 months to ensure that the steps deliver the 'desired fruits'. Markets participants also get some comfort after Economic Affairs Secretary Subhash Chandra Garg expressed optimism with government’s various reforms like fiscal consolidation drive and note ban and said that India’s second quarter (Q2) growth will be far better than the first quarter (Q1) of the current financial year. Besides, a foreign brokerage firm has time and again reiterated its bullishness on the Indian economy, saying that the country is slated to see tremendous growth in the near future. It expects the second quarter India’s Q2 GDP number growth to be around 6.5%, which will confirm a turn in the growth environment.

Positive trade in European markets too aided sentiments as financials gained ground amid fresh deal making activity. However, Asian markets ended in red terrain led by around a percent fall in Chinese markets, as investors kept an eye on developments in the bond market.

Back home, stocks related to real estate remained on buyers’ radar on private report that the number of unsold housing units in the seven major cities stood at 6.85 lakh units at the end of September quarter, a fall of 9% from the year-ago period. Shares of wind and solar companies like Suzlon Energy, Ujaas Energy and Indosolar closed in green as the Ministry of New and Renewable Energy on Friday announced auction of up to 21 GW solar and wind capacities by March 2018. Stocks related to gems and jewellery segment remained in focus, as the commerce ministry is working on a package in consultation with the gems and jewellery industry to boost export and create jobs in this labour intensive sector.

Finally, the BSE Sensex gained 45.20 points or 0.13% to 33,724.44, while the CNX Nifty was up by 9.85 points or 0.09% to 10,399.55.

The BSE Sensex touched a high and a low of 33,745.17 and 33,540.46, respectively and there were 17 stocks on gaining side as against 14 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 0.77%.

The top gaining sectoral indices on the BSE were Realty up by 1.24%, Power up by 1.22%, Utilities up by 0.82%, Telecom up by 0.68% and Consumer Discretionary Goods & Services was up by 0.68%, while Metal down by 0.65%, IT down by 0.23%, FMCG down by 0.19% and Oil & Gas was down by 0.13% were the few losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.13%, Axis Bank up by 2.73%, ONGC up by 1.41%, SBI up by 0.90% and Wipro up by 0.77%. On the flip side, Infosys down by 1.23%, Adani Ports down by 1.14%, Tata Motors down by 0.89%, Tata Steel down by 0.83% and Tata Motors - DVR down by 0.69% were the top losers.

Meanwhile, the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) in its latest report has stated that inflation would remain a key concern both for the government and Reserve Bank of India (RBI), dimming chances of any interest rates cut in the next bi-monthly monetary policy meeting in December. It observed that as uncertainty looms over crude oil prices and vegetables, largely on the back of rising retail prices of onion and tomatoes, it is disrupting household budgets.

The report claimed that the RBI’s mandate and also its track record is that it has favoured a hard stance against inflation rather than batting for growth, while the government's friendly advice for downward rates may not be available this time around. It also said that as per the monetary policy framework, RBI has a mandate to maintain retail inflation in a band of 4 percent (+/- 2 percent) and the Consumer Price Index growth for October at 5.38 percent points towards the threshold, the central bank may not like to breach it.

ASSOCHAM has stated that while the October numbers show fuel and light inflation at 6.36 percent annualised, and vegetables at above 7 percent, onion and tomato may take the retail inflation further up in November. It noted that firming up crude oil prices are adding to the anxiety. The chamber said that going forward, both external and internal factors would weigh on the mind of the Monetary Policy Committee of the RBI. It pointed out that to that extent, the macro picture may pose a challenge even as corporate India hopes for growth revival, which may now have to depend on factors other than cost of borrowing.

The CNX Nifty traded in a range of 10,407.15 and 10,340.20. There were 25 stocks in green as against 25 stocks in red on the index.

The top gainers on Nifty were NTPC up by 3.36%, Axis Bank up by 2.55%, Zee Entertainment up by 1.97%, ONGC up by 1.69% and Bharti Infratel was up by 1.52%. On the flip side, HPCL down by 1.53%, Adani Ports down by 1.26%, Infosys down by 1.07%, Ambuja Cement down by 0.96% and Tata Motors was down by 0.96% were the top losers.

The European markets were trading mostly in green; France’s CAC increased 10.09 points or 0.19% to 5,400.55 and UK’s FTSE 100 was up by 16.83 points or 0.23% to 7,426.47, while Germany’s DAX was down by 18.63 points or 0.14% to 13,041.21.

Asian equity markets ended mostly lower on Monday as investors await key data from the US and China this week for clues on growth and rate outlook. Traders also kept an eye on oil price movements ahead of a major meeting among oil producers on November 30. Japanese shares ended modestly lower in choppy trade after a slightly stronger yen sapped investors’ risk appetite, sending stocks such as chip-related firms lower. Chinese stocks fell sharply on concerns over rising borrowing costs as Beijing stepped up a crackdown to fend off financial risks. Further, Hong Kong shares closed lower, as investors largely shrugged off data showing profits at China’s industrial firms continued to grow at a robust pace last month despite a slight cooling from a sizzling September.