Benchmarks extend gains in morning session

Indian equity benchmarks extended their gains in the morning session on back of short covering in beaten down stocks. The rupee was trading lower against the dollar after the Reserve Bank of India (RBI) on Wednesday kept interest rates unchanged amid foreign funds outflows. Foreign Portfolio Investors stood net sellers in domestic equity markets on December 6 and sold shares worth Rs 1,418.69 crore with gross purchases and gross sales stood at Rs 3736.48 crore and Rs 5155.17 crore, respectively. Traders are getting some encouragement with former RBI 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. Separately, a foreign brokerage report enlightened that the country’s economic growth is expected to continue with a shallow recovery next year, and is likely to inch up to 7.2% in 2018-19 from an estimated 6.5% in the current fiscal. The report added that economic recovery will continue to be driven by consumption, supported by a pre-poll step up in public spend rather than investment, given the persistence of surplus capacity and tight 3.2% of GDP fiscal deficit target.

Investors took note of a study by the Institute of Economic Growth enlightening that the income of poor households rose by 11% and farm productivity by up to 32% due to various works carried out under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). Around 155 types of works are carried out under the rural employment guarantee scheme to ensure employment in rural areas as well bring forth asset creation in these areas. Banking stocks were buzzing on report that banks have asked the government to refund payments relating to airwaves surrendered by telcos that undergo debt restructuring as well as to cancel future deferred payment liabilities for this spectrum. The Indian Banks Association also sought return of bank guarantees provided by such companies as the sector’s liability of Rs 5,80,000 crore was primarily toward banks and spectrum payments. 

Traders were seen piling up position in Utilities, Metal and Capital Goods sector stocks. In scrip specific development, IRB Infrastructure Developers was trading in red as investors reacted negatively to a charge sheet filed by Central Bureau of Investigation (CBI). The CBI filed a charge sheet against senior officials of the company in the Sessions Court in connection with a land scam. Hatsun Agro Product was trading in green after receiving approval for raising funds by way of issue of securities to the existing equity shareholders of the company on a rights basis aggregating up to Rs 900 crore.

On the global front, Asian markets were trading mostly in red, Confidence among Japanese manufacturers held firm in December and service-sector sentiment rose for a second straight month, the poll showed, underscoring steady economic growth driven by both external and domestic demand. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 32,800 and 10,100 levels respectively. The market breadth on BSE was positive in the ratio of 1716:559, while 92 scrips remained unchanged.

The BSE Sensex is currently trading at 32810.89, up by 213.71 points or 0.66% after trading in a range of 32598.12 and 32810.89. There were 31 stocks advancing on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.99%, while Small cap index was up by 0.96%.

The top gaining sectoral indices on the BSE were Utilities up by 1.69%, Metal up by 1.41%, Capital Goods up by 1.34%, Consumer Durables up by 1.33% and Power up by 1.31%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were Tata Steel up by 1.84%, NTPC up by 1.68%, Hero MotoCorp up by 1.67%, Bajaj Auto up by 1.59% and Maruti Suzuki up by 1.57%.

Meanwhile, former Reserve Bank of India (RBI) Governor YV Reddy has stated 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. He added that “If you talk to the global communities and analyse the outcomes of the surveys, India will be the fastest growing or the second fastest growing among all major economies”.

He said the trend towards globalisation has been stalled at a time India wants to take advantage of globalisation.  There are more uncertainties in regard to global economic order than ever before. Yet, India has a better standing in the global investment community, with prospects better than most of the developing peers.
Reddy asserted that economic policies since 1991 were built on solid foundations laid brick-by-brick since 1947. “Those foundations helped India to become an emerging economic power today”.  However, he also added that the substantive elements of economic policies remain the same since 1991, despite several changes in the political leadership.

Talking on the issue of independence of RBI, he said that a central bank has been created by the government, not by the Constitution. It has been created to assure people that money and finance are important, and is apolitical and added that anything 'created' cannot be independent from its 'creator'.

The CNX Nifty is currently trading at 10110.30, up by 66.20 points or 0.66% after trading in a range of 10061.90 and 10114.65. There were 46 stocks advancing against 4 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 4.07%, Tech Mahindra up by 2.50%, Aurobindo Pharma up by 2.20%, Bosch up by 2.10% and Tata Steel up by 2.02%.

On the flip side, Zee Entertainment down by 0.28%, HCL Tech down by 0.20%, ONGC down by 0.09% and IndusInd Bank down by 0.07% were the top losers.

The Asian markets were trading mostly in red; Taiwan Weighted decreased 38 points or 0.37% to 10,355.92, Shanghai Composite decreased 22.51 points or 0.68% to 3,271.45, Jakarta Composite decreased 15.04 points or 0.25% to 6,020.47 and KOSPI Index decreased 12.53 points or 0.51% to 2,461.84.

On the other hand, FTSE Bursa Malaysia KLCI increased 2.47 points or 0.14% to 1,720.80, Hang Seng increased 42.39 points or 0.15% to 28,267.19 and Nikkei 225 increased 253.52 points or 1.14% to 22,430.56.