Benchmarks continue northward journey in afternoon deals

Local equity markets continued their northward journey in afternoon session with a gains of more than half a percent, as buying momentum in the equities persisted. Traders remained optimistic with private report that India's economy is expected to grow at a healthy 7.5% in the first quarter (Q1) of 2018-19 (FY19), lower than a seven-quarter high of 7.7% in the fourth quarter (Q4) of 2017-18 (FY18). The markets also got comfort with Niti Aayog vice chairman Rajiv Kumar’s statement that the falling rupee is not a cause of worry as it is getting back to its natural value. The rupee rose by about 17% during the last three years. Since the beginning of this year, rupee has declined by only 9.8%. So, it has recovered. The broader markets were too broadly in line with the firm benchmark indices. However, there was some cautiousness too with report that investments through participatory notes into Indian capital markets plunged to over nine-year low of Rs 80,341 crore till July-end amid stringent norms put in place by the watchdog Sebi to check misuse of these instruments.

On the global front, Asian markets were trading mostly in green, tracking the positive cues from Wall Street amid upbeat corporate earnings results and news of a new round of U.S.-China trade talks. Back home, the BSE Sensex is currently trading at 37967.28, up by 303.72 points or 0.81% after trading in a range of 37840.16 and 37982.57. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.73%, while Small cap index was up by 0.84%.

The top gaining sectoral indices on the BSE were Metal up by 2.05%, Basic Materials up by 1.63%, Healthcare up by 1.53%, FMCG up by 1.10% and Bankex up by 1.04%, while Utilities down by 0.13% and Telecom down by 0.03% were the few losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 3.24%, Yes Bank up by 2.65%, Tata Steel up by 2.53%, Kotak Mahindra Bank up by 2.05% and ITC up by 1.94%. On the flip side, Bharti Airtel down by 0.89%, ONGC down by 0.73%, Wipro down by 0.48%, Power Grid down by 0.37% and Bajaj Auto down by 0.14% were the top losers.

Meanwhile, the weakening Indian currency may be positive for certain segments in the short term but global buyers may start asking for discounts if the unit would stay near the 70 mark. Indian Silk Export Promotion Council Chairman Satish Gupta has said that most of the export bills are made in dollar terms and such exporters will benefit from the conversion in rupee but buyers are very clever. Though, he noted that the buyers have so far not started asking for benefit of currency fluctuation to be parted with them in the form discount but it is likely that the buyer will start asking for discount while realising payment if the dollar stagnates around Rs 70.

CII Director General Chandrajit Banerjee has stated that unforeseen global events have led to sharp volatility in the rupee. He also pointed out that while India is getting clubbed with other emerging markets, they are confident that stability will emerge soon as India's sound fundamentals and strong growth is taken into account. Besides, Assocham Secretary General D S Rawat has cautioned that Indian economy would be able to absorb the rupee depreciation in the range of 69-71 to a dollar range to a dollar but anything above that level would have negative impact on inflation, import bill and would consequently impact the trade deficit. He also said that being a net importing country, India cannot afford to lose value of its currency much even if other emerging markets lose in a similar way. He added that stability should be the watchword and given the forex reserves of $400 billion, the RBI should remain on top of the situation.

Furthermore, Federation of Indian Export Organisations Director General Ajay Sahai has pointed out that the overall impact of the rupee's slide will be good but vary segment-wise. According to him, while the development will be positive on shipments from the marine, agro, carpet, handicrafts, leather goods, apparel and textiles sectors; segments like gems and jewellery, electronics and petroleum may gain less. However, engineering exports' body EEPC India Chairman Ravi Sehgal has said that the yo-yoing of the rupee and related volatility is further exacerbating uncertainty for exporters because any real impact on exports would get muted from factors such as all-round depreciation of currencies of all the Emerging Markets and increase in raw material costs for shipments.

The CNX Nifty is currently trading at 11474.75, up by 89.70 points or 0.79% after trading in a range of 11431.80 and 11480.25. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Grasim Industries up by 4.69%, Lupin up by 3.12%, Vedanta up by 2.97%, Yes Bank up by 2.81% and Tata Steel up by 2.68%. On the flip side, GAIL India down by 2.21%, Bharti Airtel down by 1.02%, ONGC down by 0.85%, Power Grid down by 0.72% and Wipro down by 0.34% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 15.01 points or 0.06% to 27,115.07, Straits Times rose 9.52 points or 0.3% to 3,221.45, KOSPI added 6.25 points or 0.28% to 2,247.05, Nikkei 225 increased 78.34 points or 0.35% to 22,270.38 and Taiwan Weighted was up by 7.06 points or 0.07% to 10,690.96.
On the flip side, Shanghai Composite decreased 26.61 points or 0.99% to 2,678.58 and Jakarta Composite was down by 32.79 points or 0.57% to 5,783.80.