Post Session: Quick Review

Indian equity markets traded on a firm note throughout the day and ended the session with gains of more than a percent. The markets extended gains in second half on account of buying in telecom stocks which helped Nifty surpass 10,150 mark and Sensex gain more than 300 points. The market breadth was in favour of advances with three stocks advancing against one declining ones. The benchmarks made an optimistic start and traded with traction in early deals on back of short covering in beaten down stocks. Traders got 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.

Meanwhile, after hitting an over eight- year low in the month of September, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) surged to Rs 1.31 lakh crore at the end of October. Some support also came from World Energy Outlook’s Report launched by International Energy Agency (IEA), which stated that India is among bright spots in the global economy and is emerging as a major driving force in global energy trends, with all modern fuels and technologies playing a part. Investors also took some support from a study by the Institute of Economic Growth which enlightened 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.

On the global front, Asian markets closed 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. The European markets were trading in green as tech stocks recovered in the wake of a similar move in Asia and Wall Street. German industrial production fell unexpectedly in October but the cause was probably public holidays that let workers take long weekends. Industrial output decreased by 1.4 percent after falling by a revised 0.9 percent in September.

Back home, 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. 

The BSE Sensex ended at 32951.64, up by 354.46 points or 1.09% after trading in a range of 32598.12 and 32992.45. There were 26 stocks advancing against 5 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.41%, while Small cap index was up by 1.29%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 4.94%, Utilities up by 3.11%, Consumer Durables up by 2.64%, Power up by 2.30% and Capital Goods up by 2.09%, while there were no losers on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 6.42%, Asian Paints up by 4.03%, Maruti Suzuki up by 3.70%, NTPC up by 3.05% and Tata Steel up by 2.91%. (Provisional)

On the flip side, Cipla down by 0.83%, Coal India down by 0.60%, TCS down by 0.56%, Sun Pharma down by 0.35% and Wipro down by 0.27% were the top losers. (Provisional)

Meanwhile, after hitting an over eight- year low in the month of September, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) surged to Rs 1.31 lakh crore at the end of October. According to Securities and Exchange Board of India (SEBI) data, total value of P-note investments in Indian markets including equity, debt and derivatives, at October-end, climbed to Rs 131,006 crore, from Rs 122,684 crore at the end of September. Prior to that, the total investment value through P-notes stood at Rs 125,037 crore in August-end and Rs 135,297 crore in July-end.

Investments through P-Notes were showing declining trend in the past few months mainly on the stricter norms put in place by the market regulator, but the October data came in as a big surprise showing 6.78% growth month on month basis. Of the total, P-note holdings in equities at October-end were at Rs 90,161 crore, while in debts and derivatives were at Rs 30,468 crore and Rs 10,378 crore respectively. Though, the quantum of FPI investments via P-notes remains unchanged at 4.1 per cent.

P-Notes or offshore derivative instruments are issued by FPIs to individuals or institutions located outside India who do not want to invest directly in the domestic market by registering with Sebi. However, they need to go through due diligence and Sebi has prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those which are used for hedging purposes.

The CNX Nifty ended at 10175.80, up by 131.70 points or 1.31% after trading in a range of 10061.90 and 10182.65. There were 43 stocks advancing against 7 stocks declining on the index. (Provisional)

The top gainers on Nifty were GAIL India up by 8.57%, Bharti Airtel up by 6.94%, Tech Mahindra up by 5.13%, UPL up by 4.97% and Asian Paints up by 3.50%. (Provisional)

On the flip side, Coal India down by 0.70%, Wipro down by 0.60%, TCS down by 0.58%, Cipla down by 0.41% and Dr. Reddy’s Lab down by 0.19% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 20.61 points or 0.28% to 7,368.64, Germany’s DAX increased 59.26 points or 0.46% to 13,058.11 and France’s CAC increased 17.25 points or 0.32% to 5,391.60.