Late hour buying helps markets to end at day’s high

Bulls which woke up in last leg of trade mainly helped the benchmarks to end near intraday highs on Wednesday, with frontline gauges recapturing their crucial 37,700 (Sensex) and 10,350 (Nifty) levels. Markets made a cautious start and traded choppy for most part of the day as traders remained on sidelines ahead of macroeconomic data such as Index of Industrial Production (IIP) and Consumer Price Index (CPI) to be announced after the market hours. Market participants remain concerned with private report that regulatory policies pose the biggest risks for companies over the next three years, followed by cyber security and technology disruptions. The report showed a divide on the viewpoint of risk management amongst Indian organisations.

Key gauges gained momentum and changed gear in last leg of trade to end near intraday highs, as traders took encouragement with report that India’s exports grew by 19.21% to $27.84 billion in August on account of healthy performance by sectors such as petroleum. Merchandise imports too rose by 25.41% in August to $45.24 billion due to the rising crude oil prices, leaving a trade deficit of $17.4 billion. In July, trade deficit soared to a near five-year high of $18.02 billion. Some support also came with Moody’s Investors Service’s report that the sharp depreciation in rupee’s valuation is unlikely to impact India’s sovereign credit profile as rupee-denominated government bonds and robust foreign exchange reserves mitigate the risk. Market participants also got some relief with the Finance Ministry’s statement that the decision to double the limit to Rs 20 lakh for filing applications in debt recovery tribunals will help them focus on high value matters leading to quicker recovery of bad loans. Some optimism also came with report that India’s GDP growth is likely to have peaked in the first quarter of this fiscal and going ahead some moderation is expected as weaker rupee and rising oil prices remain two major headwinds for the economy. Some optimism also came with the department of financial services (DFS) expecting good recovery of bad loans by the public sector banks (PSBs) in the second quarter of the current financial year.

Positive opening in European markets too aided sentiments, as German economic sentiment improved more-than-expected to a four-month high in September, despite trade war fears. As per survey data from the Centre for European Economic Research or ZEW, the economic sentiment indicator climbed to -10.6 from -13.7 in August. Asian markets ended mostly in red after US President Donald Trump told reporters that the US was taking a tough stance with China.

Back home, the power stocks gained with the Supreme Court asking banks to maintain status quo and not to initiate insolvency proceedings against loan defaulting power companies in the country. Steel sector stocks edged higher on the Steel Ministry’s statement that India is hopeful of occupying the second slot in global steel output after China while the government has also taken steps to encourage secondary steel producers to boost performance. Stocks related to agriculture sector remained in focus after the cabinet approved a new procurement policy under which one scheme will focus on compensating oilseeds farmers if rates fall below the MSP, and another will allow states to rope in private players for procurement.

Finally, the BSE Sensex surged 304.83 points or 0.81% to 37,717.96, while the CNX Nifty was up by 82.40 points or 0.73% to 11,369.90.

The BSE Sensex touched a high and a low of 37,752.58 and 37,342.00, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index surged 0.52%, while Small cap index was down by 0.27%.

The top gaining sectoral indices on the BSE were FMCG up by 2.40%, Metal up by 1.52%, Capital Goods up by 1.06%, Basic Materials up by 0.93% and Healthcare was up by 0.76%, while Telecom down by 0.76%, Realty down by 0.35% and Bankex was down by 0.02% were the few losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 3.40%, ITC up by 3.11%, Sun Pharma up by 2.98%, Adani Ports & SEZ up by 2.96% and Hindustan Unilever up by 2.29%. On the flip side, Axis Bank down by 2.30%, Tata Motors down by 1.70%, Bharti Airtel down by 1.28%, ICICI Bank down by 1.07% and Yes Bank down by 0.71% were the top losers.

Meanwhile, expressing need of more private investment in agriculture research and development (R&D), Niti Aayog member Ramesh Chand has said that India's public spending on agriculture R&D is not far behind neighbouring China and added that of late in China, private investment in farm research is on the rise with rapid pace as compared to the public funding in China.

Ramesh Chand also noted globally, private sector has created more intellectual property rights in farm technologies and this shows that private sector is not avoiding investment in agriculture. He further expressed need to use technology in a more balanced way, highlighting that technology used in the Green Revolution period had some adverse effects as it promoted the use of fertilisers and pesticides.

Besides, Niti Aayog member said that the food demand is set to rise with increase in population and the technology innovation would play an important role to achieve the desired production. He also pointed out about creating awareness on nutritious foods and absence of science in food manufacturing in the country.

The CNX Nifty traded in a range of 11,380.75 and 11,250.20. There were 29 stocks in green as against 21 stocks in red on the index.

The top gainers on Nifty were Power Grid Corporation up by 3.53%, Sun Pharma up by 3.04%, Adani Ports & SEZ up by 3.00%, ITC up by 2.99% and Hindalco up by 2.94%. On the flip side, Axis Bank down by 2.18%, Tata Motors down by 2.08%, HPCL down by 1.52%, ICICI Bank down by 1.09% and Indian Oil Corporation down by 1.03% were the top losers.

European markets were trading mostly in green; France’s CAC increased 21.03 points or 0.18% to 11,991.30 and Germany’s DAX rose 28.54 points or 0.54% to 5,312.33. On the flip side, UK’s FTSE 100 was down by 1.38 points or 0.02% to 7,272.16.

Asian markets ended mostly in red on Wednesday after China said it would seek permission from the World Trade Organization next week to impose sanctions on US goods in retaliation for Washington's non-compliance with a ruling in a dispute over dumping duties. Investors also braced for a protracted trade war between the world's two biggest economies after US President Donald Trump said the US was taking a tough stance with China. Media reports suggested that China is putting off accepting license applications from American businesses hoping to operate in the country, as the Trump administration prepares to impose tariffs on all $500 billion-plus imports from China. Japanese shares ended lower on concerns over tourism demand and potential damage to business after a powerful earthquake in Hokkaido.