Benchmarks eke out slender gains ahead of RBI policy

Indian equity benchmarks ended the choppy day of trade with marginal gains on Monday, as traders remained on the sidelines ahead of Reserve Bank of India’s (RBI) monetary policy meeting which is scheduled to begin on December 5. The central bank is widely expected to keep rates on hold, investors will watch out for any hints of a cut in its policy statement. Markets after a cautious start gained some ground and traded in green for most part of the day’s trade but in narrow range. Sentiments remained positive with former vice-chairman of NITI Aayog Arvind Panagariya’s statement that the economy will grow by over 6.5% in the current financial year. He said the macroeconomic indicators have remained stable for the past three years with current account deficit hovering around one per cent and inflation moderating. Traders also took some solace with the statement of Mukesh Ambani, Reliance Industries chairman that India’s GDP will double to $ 5 trillion in the next seven years and hit $ 10 trillion by 2030 as it will elbow out China by the middle of 21st century. Meanwhile, the International Monetary Fund (IMF) has said that it will update its growth rate forecast for India in January.

Finance Minister Arun Jaitley’s statement that the GST has made doing business easier for traders, to spread business activities in the country, too aided sentiments. He added the market place for traders had opened the horizons and there is lesser tax compliance burden. However, gains remained capped with Chief Economist at World Bank Kaushik Basu expressing disappointment at the 6.3% GDP expansion in the September quarter said that with oil prices so low, India’s economic growth should have been back at over 9%. He added that this massive slowdown needs to be properly diagnosed. Sentiments also weighed down on private report stating that CPI inflation is expected to firm up in the coming months driven by cyclical recovery in the economy and further implementation of pay commission-related hikes by states.

Positive opening in European counters too aided sentiments, as positive news on the Brexit and the US tax reform front improved sentiment around the globe. UK construction sector activity grew more than expected in November, hitting its fastest pace in five months and bolstering optimism over the British economy. Asian markets exhibited mixed trend, as traders marked the passage of a US Senate tax bill over the weekend, a move that raises the risk of more aggressive rate hikes in the world’s largest economy.

Back home, Infosys remained the top gainer in on the Sensex after the IT giant named Salil S Parekh, a member on the board of its global rival Capgemini, as its new chief executive officer (CEO) and managing director (MD), ending a three-month-long search. On the sectoral front, PSU stocks remained on buyers’ radar on report that the Centre is likely to come up with expression of interest (EOI) for strategic sale in three-to-four out of the 16 odd public sector units (PSUs) shortlisted. Some banks have already got approval from the finance ministry while others are in the process of getting the green signal for raising capital either through private placement or the rights issue. Stocks related to media sector remained in focus on a private report that the Indian media and entertainment (M&E) industry would nearly double in size by 2022, clocking 11-12% CAGR between 2016 and 2022.

Finally, the BSE Sensex gained 36.78 points or 0.11% to 32,869.72, while the CNX Nifty was up by 5.95 points or 0.06% to 10,127.75.

The BSE Sensex touched a high and a low of 33,008.47 and 32,785.76, respectively and there were 17 stocks on gaining side as against 14 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.09%, while Small cap index was down by 0.52%.

The top gaining sectoral indices on the BSE were IT up by 1.37%, TECK up by 1.08%, Metal up by 0.50%, Healthcare up by 0.32% and Oil & Gas was up by 0.31%, while Telecom down by 0.66%, Realty down by 0.54%, Energy down by 0.54%, Power down by 0.41% and Bankex was down by 0.30% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.80%, Hindustan Unilever up by 1.37%, HDFC up by 1.25%, Tata Motors up by 1.06% and Tata Steel up by 1.03%. On the flip side, Coal India down by 2.09%, Asian Paints down by 1.02%, Sun Pharma down by 0.95%, Reliance Industries down by 0.92% and Maruti Suzuki down by 0.91% were the top losers.

Meanwhile, a joint study of industry body Associated Chambers of Commerce and Industry of India (Assocham) and research firm RNCOS has stated that Indian healthcare sector is likely to witness threefold jump as its size in value terms may to reach $372 billion by the year 2022 from $110 billion in 2016. Thus, it noted that the healthcare sector will clock a compounded annual growth rate (CAGR) of 22 percent. As per the report, growing lifestyle diseases, rising demand for affordable healthcare delivery systems due to increasing healthcare costs, emergence of telemedicine, rapid health insurance penetration, mergers and acquisitions helping to reach untapped markets and government initiatives are driving healthcare market in India.

The Assocham-RNCOS study further stated that the medical devices market in India, which was valued at $4 billion as of 2016, is likely to cross $11 billion mark by 2022 on the back of factors such as growing geriatric population, uptick in medical tourism and gradual decline in cost of medical services. However, it noted that imports make up about 75 percent of Indian medical devices market.

With regards to the Goods and Services Tax (GST) impact on pharma industry, the report said the new tax regime will streamline taxation structure as also lead to ease of doing business by minimising cascading effect of many taxes applied to a product, rationalise supply chain, enable flow of seamless tax credit, lower manufacturing cost and cost of technology and make healthcare affordable. It also highlighted that increasing expenditure on research and development (R&D), rising collaborations between Indian and foreign companies, reduction in product approval time and other such factors are driving the growth of Indian pharmaceutical market.

The CNX Nifty traded in a range of 10,179.20 and 10,095.70. There were 28 stocks in green as against 20 stocks, while 2 stocks remained unchanged in red on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 3.29%, Infosys up by 2.67%, HCL Tech up by 2.28%, GAIL up by 1.84% and Hindalco was up by 1.76%. On the flip side, Bharti Infratel down by 2.60%, UPL down by 2.39%, Coal India down by 2.26%, Bajaj Finance down by 2.09% and Ultratech Cement down by 1.58% were the top losers.

The European markets were trading in green; France’s CAC surged 51.14 points or 0.96% to 5,368.03, UK’s FTSE 100 increased 59.5 points or 0.82% to 7,359.99 and Germany’s DAX was up by 156.24 points or 1.21% to 13,017.73.

Asian equity markets ended mixed on Monday after US Senate Republicans narrowly passed a bill to overhaul the US tax system and President Donald Trump said he never asked FBI director James Comey to stop investigating former National Security Adviser Michael Flynn. Japanese shares ended lower in cautious trade, dragged down by technology stocks. While,  survey data from the Cabinet Office showed Japan's consumer confidence improved as expected in November to the highest level in more than four years. The consumer confidence index climbed to 44.9 from 44.5 in the previous month.