Benchmarks trade firm as BJP leads in polls

Indian equity benchmarks continued their trade in green in morning session on account of buying in frontline blue chip counters. The sentiments were upbeat after BJP took comfortable leads in Gujarat and Himachal Pradesh elections, which is considered a prestige battle for Prime Minister Narendra Modi in his home state and a litmus test for new Congress president Rahul Gandhi. The rupee plunged against dollar on account of buying of American currency by banks and importers. Foreign Portfolio Investors stood net buyers in domestic equity markets on Friday and bought shares worth Rs 280.55 crore with gross purchases and gross sales of Rs 5,025.97 crore and Rs 4,745.42 crore, respectively.

Sentiments also remained up-beat with data from the commerce department, which showed that India’s exports rose at a faster clip in November, reversing the contraction in the previous month. Exports grew 30.6 percent in November from a year ago, while imports rose 19.6 percent. Separately, the street took note of report that India can achieve an eight percent growth rate for the next two decades by promoting investment and improving the living conditions of its people. The UN economic official said that one of this is the growth of private consumption and sound macroeconomic policies. The monetary policy, which has been able to control inflation, also has a role to play.

Investors took note that foreign investors are flocking to the Indian capital markets in a big way with a net inflow of over $30 billion (more than Rs 2 lakh crore) of so-called hot money in 2017, with equities alone getting over $8 billion -- an amount bigger than the cumulative investment of the previous two years. Public sector bank were buzzing on report that the first round of capital infusion for state-run banks that was announced recently is likely to take place soon. The government is likely to raise around Rs 70,000 crore by February 2018 as part of the total Rs 1.35 lakh crore to be met through recapitalization bonds.

Traders were seen piling up position in Metal, Auto and Consumer Disc sector stocks. In scrip specific development, Future Supply Chain Solutions, the logistics arm of the Future Group, was trading in green after making its debut on the bourses. The Initial Public Offering of the company was oversubscribed 7.56 times. The issue was open for subscription from December 5 to December 8. YES Bank and IndusInd Bank were trading in green as the two stocks are included in the benchmark Sensex, replacing drugmakers Cipla and Lupin.

On the global front, Asian markets were trading mostly in green. Japanese exports accelerated sharply in November, yet again pointing to growing momentum in the world’s third-biggest economy. The combination of steady growth and benign consumer prices mean the Bank of Japan will lag other major central banks in exiting crisis-era monetary stimulus, with street widely expecting BOJ Governor Haruhiko Kuroda to keep the liquidity tap wide open at a meeting later this week. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,600 and 10,350 levels respectively. The market breadth on BSE was positive in the ratio of 1514:736, while 127 scrips remained unchanged.

Back home, select stocks from footwear industry were buzzing after, on Friday, the Union Cabinet chaired by Prime Minister Narendra Modi approved special package for employment generation in leather and footwear sector. The package involves implementation of central scheme ‘Indian Footwear, Leather & Accessories Development Programme’ with an approved expenditure of Rs 2,600 crore over the three financial years from 2017-18 to 2019-20.

The BSE Sensex is currently trading at 33609.26, up by 146.29 points or 0.44% after trading in a range of 32595.63 and 33703.51. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.62%, while Small cap index was up by 0.44%.

The top gaining sectoral indices on the BSE were Metal up by 1.68%, Auto up by 0.83%, Consumer Disc up by 0.83%, Healthcare up by 0.71% and Basic Materials up by 0.63%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.22%, Adani Ports & Special Economic Zone up by 1.54%, Tata Steel up by 1.27%, Sun Pharma up by 1.12% and ICICI Bank up by 0.97%.

On the flip side, Power Grid down by 0.95%, ITC down by 0.43%, Wipro down by 0.35%, Yes Bank down by 0.27% and NTPC down by 0.20% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Governor Urjit Patel has said that with growth picking up in the second quarter of the current financial year, the economic slowdown may have bottomed out. He said that “Our recent growth numbers may have disappointed some in the first quarter of this fiscal year, but the second quarter has recorded an uptick and the slowdown may well be bottoming out”.

The RBI governor in a speech at a conference organised by CAFRAL on “Financial System and the Macroeconomy said, while structural changes, such as the introduction of the Goods and Services Tax (GST), may result in temporary disruptions, they were 'efficiency augmenting' in the medium to long term. He said the current account deficit 'remains within sustainable levels', and other indicators of external viability also reflected a healthy improvement.

He further said that to add one more important reform to the list, there has been substantial liberalisation of Foreign Direct Investment (FDI) policy, embraced by FDI investors with record inflows to India. He added that domestic financial markets have shown resilience and stability in spite of escalation of global geopolitical uncertainty and heightened volatility in financial markets.  These developments have enabled the build-up of buffers against unforeseen shocks. At the same time, building up adequate buffers in foreign exchange reserves was a natural 'self-insurance' to manage risks arising out of volatile capital flows.

Talking about inflation he said that a related source of concern for policymakers is about managing inflation. There is growing global uncertainty regarding the determining factors of inflation, especially in advanced economies and while some disinflation was underway and inflation expectations were, perhaps, getting re-anchored, “considerable caution and vigilance” was warranted.

The CNX Nifty is currently trading at 10384.95, up by 51.70 points or 0.50% after trading in a range of 10074.80 and 10412.30. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.17%, GAIL India up by 2.68%, Mahindra & Mahindra up by 2.40%, Cipla up by 2.29% and Hindalco up by 2.06%.

On the flip side, Tech Mahindra down by 1.40%, Indian Oil Corporation down by 1.05%, HPCL down by 0.73%, Power Grid down by 0.68% and BPCL down by 0.53% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 0.88 points or 0.04% to 2,482.95, Taiwan Weighted increased 29.23 points or 0.28% to 10,520.67, Hang Seng increased 153.74 points or 0.53% to 29,001.85 and Nikkei 225 increased 332.36 points or 1.47% to 22,885.58.

On the other hand, Jakarta Composite decreased 30.43 points or 0.5% to 6,088.99, Shanghai Composite decreased 4.13 points or 0.13% to 3,262.01 and FTSE Bursa Malaysia KLCI decreased 3.43 points or 0.2% to 1,749.64.