Sensex, Nifty maintain gains; Metal stocks shine

Key Indian benchmarks maintained their gains in late morning session, with Sensex crossing psychological level of 33,500, despite weak Asian cues. Sentiments were optimistic as 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. Some support also came with Finance Minister Arun Jaitley’s statement that the strengthening of public sector banks (PSBs), infrastructure and housing will be top priorities for government next year. Adding some optimism, the private report stated that India's economic growth has bottomed out and the GDP growth will recover further to 7 per cent over the next few quarters but it is likely to take few years to return to 7.5 per cent above levels. Meanwhile, the government will hold consultations with the Reserve Bank of India (RBI) to work out a mechanism to bring down merchant discount rates (MDR) that have gone up to 0.90% recently from 0.25% of transaction value.

On the global front, Asian markets were trading mostly in red, following a sell-off on Wall Street as traders fear US lawmakers will fail to pass much-vaunted tax cuts. Back home, in scrip specific development, Phoenix Mills was trading higher after the company issued Commercial Papers (CPs) of Rs 75 crore on December 14, 2017.

The BSE Sensex is currently trading at 33517.30, up by 270.60 points or 0.81% after trading in a range of 33456.02 and 33621.96. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.87%, while Small cap index was up by 1.24%.

The top gaining sectoral indices on the BSE were Metal up by 2.47%, Basic Materials up by 1.40%, Capital Goods up by 1.35%, Industrials up by 1.25% and Consumer Durables up by 1.08%, while there were no losers on the BSE sectoral front. 

The top gainers on the Sensex were Coal India up by 2.72%, HDFC Bank up by 2.42%, Bajaj Auto up by 2.20%, Adani Ports & SEZ up by 2.14% and Larsen & Toubro up by 1.64%. On the flip side, Cipla down by 0.77%, ONGC down by 0.65%, Power Grid Corporation down by 0.28%, NTPC down by 0.23% and Hindustan Unilever down by 0.13% were the top losers.

Meanwhile, with India Inc growing at a rapid pace, global credit rating agency Moody’s Investors Services has assigned a largely stable outlook for non-financial corporates in the country. However, it has assigned a negative outlook for telecom sector, and said that intense competition and heavy debt loads continue to pressure cash flows over the next 12-18 months. Besides, it has stable outlooks for car-makers, and companies in the construction, cement, and textiles sectors, but a negative outlook on the real estate sector.

The US-based agency has stated that its stable outlook is underpinned by the expectation that Gross domestic product (GDP) growth of around 7.6 percent will result in higher sales volumes, which along with new production capacity and stabilising commodity prices, will support pre-tax profit growth of 5-6 percent over the next 12-18 months. It also believed that further simplification of Goods and Services Tax (GST) and other structural reforms or improved commodity prices can result in higher operational profit growth, and provide means for deleveraging for some corporates. Besides, the agency has a stable outlook for exploration and production companies, reflecting expectations of stable production volume, low subsidy burdens and stable oil prices. For refining and marketing, the credit rating agency's stable outlook is based on the consideration that capacity additions and higher refining margins will increase earnings, even as marketing margins stay stable. It pointed out that while high dividend payments remain a concern, if GST net is widened to petroleum products, it would be a credit positive for the sector.

Maintaining a stable outlook for base metals, Moody’s sees improved fundamentals and improving supply side in certain metals supporting stable prices over the next 12-18 months. It also expects base metal pricing premiums to narrow, although higher production from capacity additions and cost rationalization measures will drive earnings expansion. Adding further, it said that the stable outlook on IT services incorporates the expectation that domestic companies will remain in the forefront in offering IT services to the Western economies, weighed against some of the global challenges, especially in terms of H1B visas and the fast-pace of technology changes that will require investments or acquisitions.

The CNX Nifty is currently trading at 10343.00, up by 90.90 points or 0.89% after trading in a range of 10332.20 and 10373.10. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 4.02%, Coal India up by 2.61%, Hindalco up by 2.37%, HDFC Bank up by 2.28% and Eicher Motors up by 2.19%. On the flip side, Tech Mahindra down by 1.09%, Cipla down by 0.82%, ONGC down by 0.52%, Power Grid Corporation down by 0.50% and Bharti Infratel down by 0.24% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 285.23 points or 0.98% to 28,881.15, Taiwan Weighted decreased 46.57 points or 0.44% to 10,491.44, Nikkei 225 decreased 44.61 points or 0.2% to 22,649.84, Jakarta Composite decreased 28.52 points or 0.47% to 6,085.13, Shanghai Composite decreased 18 points or 0.55% to 3,274.43 and FTSE Bursa Malaysia KLCI decreased 4.66 points or 0.26% to 1,754.34.

On the flip side, KOSPI Index increased 12.74 points or 0.52% to 2,482.22.