Firm trade prevails in morning session

Indian equity benchmarks continued their firm trade in morning session on account of buying in frontline blue chip counters after exit polls predicted a victory for the ruling BJP in Gujarat. The rupee scaled a fresh 3-month high against dollar in early trade on exit polls findings. Foreign Portfolio Investors stood net buyers in domestic equity markets on Thursday and bought shares worth Rs 187.73 crore with gross purchases and gross sales at Rs 6,080.46 crore and Rs 5,892.73 crore, respectively. After witnessing a sudden spike to $65 levels, oil prices seem to have stabilized by now. Oil markets were stable as the Forties pipeline outage in the North Sea and the ongoing OPEC-led production cuts supported prices, while rising output from the United States kept crude from rising further.

Sentiments remained upbeat with exit polls indicating both Himachal Pradesh and Gujarat going in favour of ruling BJP. Exit polls conducted by various polling agencies for news channels have predicted that BJP would retain Gujarat with a reduced margin of seats in the 182-member assembly, though one of them predicted a sweep. Some support also came with global rating agency Moody’s statement that it has a stable outlook for non-financial corporate in the country, except for telcos, on which it has a negative outlook for 2018. It said that stable outlook is underpinned by the expectation that GDP growth of around 7.6% will result in higher sales volumes.

Investors took note of a private report which enlightened that India’s economic growth has bottomed out and the GDP growth will recover further to 7% over the next few quarters but it is likely to take few years to return to 7.5% above levels. The report showed that the worst is over for India’s GDP growth, while forecasting a growth rate of 6.5% for the current fiscal and 7.2% in the year thereafter. Separately, Finance minister Arun Jaitley identified infrastructure creation, resolution of non-performing assets and recapitalization of banks as the priority areas to push the country further on growth path.

Traders were seen piling up position in Metal, Capital Goods and Basic Materials sector stocks. In scrip specific development, Ahmedabad-based multi-speciality hospital chain operator Shalby was trading in green after debuting in red on the exchange. The Rs 504-crore initial public offer was oversubscribed 2.82 times during November 5-7, 2017. Utility vehicle major Mahindra & Mahindra (M&M) was trading in green on report that the company will increase prices of its passenger and commercial vehicles by up to 3% from January.

On the global front, Asian markets were trading mostly in red. Japanese business confidence improved for a fifth straight quarter in the three months to December to hit an 11-year high, a central bank survey showed, a sign the economy is gathering momentum from robust exports and booming corporate profits. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,500 and 10,300 levels respectively. The market breadth on BSE was positive in the ratio of 1689:562, while 118 scrips remained unchanged.

The BSE Sensex is currently trading at 33547.76, up by 301.06 points or 0.91% after trading in a range of 33456.02 and 33621.96. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.89%, while Small cap index was up by 1.24%.

The top gaining sectoral indices on the BSE were Metal up by 2.45%, Capital Goods up by 1.45%, Basic Materials up by 1.37%, Industrials up by 1.36% and Realty up by 1.27%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were HDFC Bank up by 2.39%, Adani Ports & Special Economic Zone up by 2.21%, Bajaj Auto up by 2.20%, Coal India up by 2.19% and Larsen & Toubro up by 1.72%.

On the flip side, Power Grid down by 0.42%, ONGC down by 0.35% and Kotak Mahindra Bank down by 0.02% were the few losers on the Sensex .

Meanwhile, the International Monetary Fund (IMF), which is slated to come out with an update of its projections of India’s growth rate along with the rest of the world in January, sees benefits in the medium-term from the demonetisation exercise which India carried out about a year ago.

William Murray of the IMF said “We see salutary benefits from the demonetisation that took place a year ago. And there are potential benefits going forward.” He added that the demonetisation did cause some temporary disruptions in economic activity, primarily, private consumption and small businesses due to cash shortages but the effects are dissipating.

He further said that in the medium term, demonetisation could have possible effects, including through greater formalisation of and the information on economic activities and a more efficient payment system with a greater use of the banking system and digital payments.

The multilateral agency though had recently lowered India’s economic growth for 2017 and 2018 in its 'World Economic Outlook report' citing lingering impact of demonetisation and the Goods and Services Tax and projected India to grow at 6.7% in 2017 and 7.4% in 2018, 0.5 and 0.3 percentage points less than the projections earlier this year, respectively. 

The CNX Nifty is currently trading at 10348.95, up by 96.85 points or 0.94% after trading in a range of 10332.20 and 10373.10. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 4.02%, Eicher Motors up by 2.58%, Hindalco up by 2.41%, HDFC Bank up by 2.39% and Coal India up by 2.26%.

On the flip side, Tech Mahindra down by 1.36%, Power Grid down by 0.55%, ONGC down by 0.35%, Wipro down by 0.17% and Bharti Infratel down by 0.10% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 303.44 points or 1.04% to 28,862.94, Taiwan Weighted decreased 82.69 points or 0.78% to 10,455.32, Shanghai Composite decreased 28.87 points or 0.88% to 3,263.57, Jakarta Composite decreased 28.52 points or 0.47% to 6,085.13, FTSE Bursa Malaysia KLCI decreased 4.66 points or 0.26% to 1,754.34 and Nikkei 225 decreased 1.7 points or 0.01% to 22,692.75.

On the other hand, KOSPI Index increased 13.65 points or 0.55% to 2,483.13.