Key indices hold strong momentum

Local equity benchmarks maintained their upward momentum in the morning, with Sensex trading near 38,000 mark and Nifty above 11,450 level, on heavy buying by domestic institutional investors as the industrial production grew at 6.6% in July and retail inflation cooled to a 10-month low. Yes Bank, Power Grid and Asian Paints were the prime gainers among heavy-weights, pushing Sensex higher. Traders took note of private report stating that private equity (PE) and venture capital (VC) investments stood at $1.6 billion across 50 deals in August, with buyout deals recording two times increase in value compared to the year-ago period. Investors ignored a private report that even though retail inflation in August dipped to a 10-month low of 3.69%, weaker rupee and rising crude oil prices may exert pressure on CPI inflation going forward. Meanwhile, the government is determined to keep fiscal deficit within the budgeted level of 3.3% of GDP as the country cannot afford to have a twin deficit problem. Depreciating rupee and high crude import bill would definitely put pressure on the country’s current account deficit (CAD), and a fiscal slippage at this juncture would lead to a twin deficit.

On the global front, Asian markets were trading mostly in green, on hopes for China-US trade talks, while Turkey’s lira held up after a shock hike in the country’s interest rate and a dip in US inflation. Back home, on the sectoral front, banking stocks were trading in green, despite on Raghuram Rajan’s statement bankers got over-optimistic and stopped doing their due diligence and this laid the foundation of the crisis. This is true for both Lehman bankruptcy and the US financial crisis, and the mounting NPA mess in India.

The BSE Sensex is currently trading at 37940.91, up by 222.95 points or 0.59% after trading in a range of 37874.33 and 38058.92. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.42%, while Small cap index was up by 1.21%.

The top gaining sectoral indices on the BSE were Power up by 2.10%, Realty up by 2.02%, Consumer Durables up by 1.81%, Healthcare up by 1.79%, Utilities up by 1.79%, while IT down by 0.32%, TECK was down by 0.22% were the only losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.66%, Power Grid up by 3.52%, Asian Paints up by 2.33%, Vedanta up by 1.97% and Tata Steel was up by 1.95%. On the flip side, Infosys down by 0.64%, Hindustan Unilever down by 0.42%, Wipro down by 0.30%, ITC down by 0.16% and TCS was down by 0.11% were the top losers.

Meanwhile, continuing declining trend for the second straight month, India’s retail inflation based on Consumer Price Index (CPI) softened to a 10-month low of 3.69% in the month of August 2018, as compared to 4.17% in previous month (July), mainly on the back of easing prices of fruits, vegetables and other food items. This was below the Reserve Bank of India’s (RBI’s) target of 4%. The previous low for CPI inflation was in October 2017, when it stood at 3.58%. Besides, consumer food price inflation, a metric to gauge changes in monthly kitchen costs, also eased to 0.29% in August 2018, compared with 1.52% rise in August 2017 and 1.30% in July 2018.

As per the data of the Central Statistics Office (CSO), Ministry of Statistics and Programme, the CPI (Rural, Urban, Combined) on Base2012=100 for August 2018, stood at 3.41%, 3.99% and 3.69% respectively, compared to 3.22% , 3.35% and 3.28% respectively in August 2017. The index value of CPI for combined stood at 140.4. The data also showed that Consumer Food Price Index (CFPI) for all India Rural and Urban for August 2018 stood at 1.22% and (-) 1.21%, respectively, compared to 1.38% and 1.67%, respectively in August 2017. The index value of CFPI for combined stood at 140.5 for the month of August.

According to the data, inflation of food and beverages eased to 0.85% in August 2018 from 1.73% in July 2018. Within the food items, the inflation eased for vegetables to (-) 7.00%, fruits 3.57%, prepared meals, snacks, sweets etc 4.16%, milk and products 2.66%, egg 6.96% and spices 2.88%. On the other hand, the inflation rose for meat and fish to 3.21% pulses and products (-) 7.76% and oils and fats 3.47% in August 2018. The inflation for housing eased to 7.59%, while that for miscellaneous items dipped to 5.52% in August 2018. The inflation for clothing and footwear was lower at 4.88%. There was a moderate increase in inflation in the fuel and light segment; it rose to 8.47% in August compared to about 8% in July.

The CNX Nifty is currently trading at 11458.50, up by 88.60 points or 0.78% after trading in a range of 11430.55 and 11484.80. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 4.15%, Yes Bank up by 3.75%, BPCL up by 3.71%, HPCL up by 3.56% and Power Grid was up by 3.15%. On the flip side, HCL Tech down by 0.90%, Infosys down by 0.71%, Bharti Airtel down by 0.41%, Wipro down by 0.30% and ITC was down by 0.26% were the top losers.

Asian markets were trading mostly in green, Hang Seng advanced 199.75 points or 0.73% to 27,214.24, Taiwan Weighted surged 118.96 points or 1.1% to 10,846.19, Straits Times soared 22.11 points or 0.7% to 3,153.88, KOSPI rose 27.92 points or 1.21% to 2,314.15, Nikkei 225 gained 207.24 points or 0.9% to 23,028.56 and Jakarta Composite was up by 29.84 points or 0.51% to 5,888.11.

On the other side, Shanghai Composite was down by 3.55 points or 0.13% to 2,683.03.