Benchmarks make optimistic start to the final trading session of CY2017

Indian equity benchmarks made positive start to the last trading session of the Calendar Year (CY) 2017 and are trading in fine fettle with frontline gauges recapturing their crucial 33,900 (Sensex) and 10,500 (Nifty) levels. Some support came after SEBI’s board met on Thursday and paved the way for all stock exchanges to sell all products from October 2018, but it deferred its decision on disclosure of defaults by listed companies. It decided to relax entry norms for foreign portfolio investors (FPIs) willing to invest in the Indian markets. Besides, SEBI would allow listing of security receipts issued by an asset reconstruction company (ARC) on stock exchange platform. However, traders remained little concerned with a study report of the industry body Assocham, which has said that a slowdown in the economy coupled with high stress level in the banking sector is expected to restrict credit growth at around 8 per cent during the current fiscal despite government’s thrust on loan expansion. Traders also took note of report from rating agency ICRA which has said that rising commodity prices, especially that of crude oil that has hit a three-year peak last week, will double current account deficit (CAD) to $39 billion or 1.5 per cent of GDP this fiscal year.

On the global front, Asian markets rallying at this point of time. Japanese equity benchmarks opened higher even though the yen held gains. The US markets despite a choppy trading ended in green in the last session, with the Dow reaching a new record closing high, however many traders remained away from their desks ahead of the New Year's weekend, leading to another light trading day.

Back home, telecom stocks are ringing loud on the bourses, especially Anil Ambani's debt-laden Reliance Communications will be in focus, as the company has signed an agreement to sell its wireless assets to Reliance Jio Infocomm, the telecoms arm of elder brother Mukesh Ambani's Reliance Industries. In scrip specific developments, Indiabulls Housing Finance advanced on raising Rs 780 crore through NCDs, while Quess Corp gained on receiving nod to acquire additional 10% equity in GSFS.

The BSE Sensex is currently trading at 33956.19, up by 108.16 points or 0.32% after trading in a range of 33889.39 and 33986.07. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.64%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Telecom up by 1.75%, Consumer Durables up by 0.77%, Power up by 0.76%, Capital Goods up by 0.74% and FMCG was up by 0.71%, while IT down by 0.16% and Metal was down by 0.07% were the only losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.59%, Hero MotoCorp up by 1.21%, Axis Bank up by 0.99%, Bharti Airtel up by 0.91% and ITC up by 0.88%. On the flip side, Wipro down by 1.17%, Mahindra & Mahindra down by 0.63%, ONGC down by 0.23%, HDFC Bank down by 0.12% and Bajaj Auto down by 0.12% were the top losers.

Meanwhile, the credit ratings agency, ICRA in its latest report has projected the current account deficit (CAD) doubling to $39 billion or 1.5% of Gross Domestic Product (GDP) in the fiscal year 2017-18, on rising commodity prices - especially that of crude oil that has hit a three-year peak recently. The rating agency, in September, had pegged CDA, the difference between inflows and outflows of foreign exchange based on the sale of merchandise, services and remittances, at 1.3% of GDP.

The report stated that the widening merchandise trade deficit will lead to deterioration in CAD to around between $12 billion and $15 billion. This translates to 2% to 2.3% of the GDP in the December quarter. However, seasonal factors will help the CAD shrink sharply to under $5 billion for the March quarter, settling for a yearly deficit of 1.5% of GDP, at $39 billion. So far this fiscal, the country has recorded a CAD of 2.4% in the first quarter and 1.2% in Q2.

ICRA further said that shrinkage in the March quarter will happen despite the unfavourable base effect of exports growth, and elevated expectations on import commodity prices such as crude oil, coal, steel and non-ferrous metals, to remain elevated. It also said that expectations of widening of merchandise trade deficit is largely due to the high prices of commodity imports and added that the deficit is expected to be in double- digits for the third straight month in December despite help from rising exports. Besides, the merchandise trade deficit was $14 billion in both October and November 2017.

The rating agency expects a push towards completion of export orders prior to the quarter-end as well as a seasonal decline in gold imports in December, both of which are likely to soften the merchandise trade deficit relative to the levels seen in the previous two months. On the short-term future it is expecting a sharp improvement and it said gold imports are likely to ease in Q4, relative to Q4 of FY17, which had witnessed a restocking-led spurt. It also said an unfavourable base effect may arrest the pace of growth in merchandise exports in Q4 from an expected 15% to 16% in Q3, reiterating that seasonal factors will keep the CAD under $5 billion for Q4.

The CNX Nifty is currently trading at 10505.15, up by 27.25 points or 0.26% after trading in a range of 10488.65 and 10515.40. There were 35 stocks advancing against 14 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Bharti Infratel up by 1.68%, Asian Paints up by 1.64%, Axis Bank up by 1.15%, Ultratech Cement up by 1.10% and Hero MotoCorp up by 0.98%. On the flip side, Wipro down by 1.27%, Hindalco down by 1.09%, GAIL India down by 0.67%, Mahindra & Mahindra down by 0.65% and Vedanta down by 0.63% were the top losers.

Asian markets rally; FTSE Bursa Malaysia KLCI rose 0.79 points or 0.04% to 1,779.89, Shanghai Composite gained 2.5 points or 0.08% to 3,298.88, Nikkei 225 increased 24.68 points or 0.11% to 22,808.66, Jakarta Composite jumped 52.14 points or 0.83% to 6,366.18, Taiwan Weighted added 66.51 points or 0.63% to 10,634.15 and Hang Seng was up by 105.8 points or 0.35% to 29,969.51.