Markets make optimistic start; Nifty shy of 10,100 mark

Indian equity benchmarks made an optimistic start and are trading with traction in early deals with Nifty inching towards 10,100 level, as traders opted to buy beaten down but fundamentally strong stocks after two days of continuous drubbing. Traders are getting some encouragement with former Reserve Bank of India Governor YV Reddy’s statement that amid uncertainties in the global economic order, a sense of optimism about the future is more in India than in other parts of the world. Meanwhile, at a meeting with Finance Minister Arun Jaitley in the run-up to the last full-year Budget of the NDA government before 2019 general elections, India Inc. has sought lower tax and more incentives for investments while exporters called for quicker GST refunds.

On the global front, Asian markets exhibiting mixed trend, but the Japanese market was up by over a percent as the yen weakened. The US markets once again made a mixed closing in the last session and the major averages spent the day bouncing back and forth across the unchanged line.

Back home, all eyes will now be on the forthcoming elections in Gujarat where various opinion polls suggest the ruling BJP and the Opposition party Congress are in a neck-to-neck race. The outcome may have implications on the government policies ahead. In scrip specific development, Bharti Airtel ringing loud on entering into partnership with Intex, while Tata Motors catched speed on rolling out first batch of electric-Tigor for EESL. L&T too trading with traction with its arm bagging order worth Rs 1,600 crore from HPCL.

The BSE Sensex is currently trading at 32774.59, up by 177.41 points or 0.54% after trading in a range of 32598.12 and 32776.15. There were 30 stocks advancing against 1 stock declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.90%, while Small cap index was up by 0.87%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.38%, Utilities up by 1.31%, Oil & Gas up by 1.16%, Industrials up by 1.06% and PSU was up by 1.06%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Larsen & Toubro up by 1.72%, Tata Steel up by 1.44%, NTPC up by 1.34%, Maruti Suzuki up by 1.27% and Hero MotoCorp up by 1.24%. On the flip side, Wipro down by 0.11% was the sole loser.

Meanwhile, maintaining status quo for the second time in a row, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has kept policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0%. Consequently, the reverse repo rate under the LAF remains at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25%. But it also warned about lurking inflation worries in the New Year, amid signs that costlier food and fuel prices could pinch household budgets. The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.

In its Fifth Bi-monthly Monetary Policy Statement, 2017- 18, RBI has raised the inflation forecast for the next two quarters from 4.2-4.6% to 4.3-4.7% on rising crude oil and vegetable prices. However, it said that headline inflation has gone along the projections. The central bank factored in the Housing Rent Allowance (HRA) effect of up to 35 basis points, with risks evenly balanced, following the implementation of the 7th Pay Commission recommendations for central government employees. The impact of HRA is expected to peak in December. However, the staggered impact of HRA increases by various state governments may push up housing inflation further in 2018. It added that the recent rise in international crude oil prices may sustain, especially on account of the OPEC's decision to maintain production cuts through next year.

The RBI also said that the implementation of farm loan waivers by select states, partial roll back of excise duty and VAT in the case of petroleum products, and decrease in revenue on account of reduction in Goods and Services Tax rates for several goods and services may result in fiscal slippage with attendant implications for inflation. On the growth front, it said the economy could grow at 6.7% for the full year, maintaining its earlier forecast. In the third and fourth quarters, the GDP growth rates could be 7% and 7.8%, respectively.

The CNX Nifty is currently trading at 10099.70, up by 55.60 points or 0.55% after trading in a range of 10061.90 and 10104.85. There were 48 stocks advancing against 2 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.82%, Tech Mahindra up by 2.08%, Bosch up by 1.83%, Aurobindo Pharma up by 1.75% and Tata Steel up by 1.51%. On the flip side, HCL Tech. down by 0.36% and Wipro down by 0.21% were the only losers.

Asian markets were trading mixed; Shanghai Composite declined 20.49 points or 0.62% to 3,273.47, KOSPI Index decreased 19.93 points or 0.81% to 2,454.44, Taiwan Weighted slipped 18.11 points or 0.17% to 10,375.81 and Jakarta Composite was down by 6.91 points or 0.11% to 6,028.60.

On the flip side, Hang Seng rose 1.57 points or 0.01% to 28,226.37, FTSE Bursa Malaysia KLCI added 1.64 points or 0.1% to 1,719.97 and Nikkei 225 was up by 269.37 points or 1.21% to 22,446.41.