Local equities erase losses to turn green

Local equity benchmarks erased all the initial losses to turn green in morning session, with Sensex and Nifty gaining around one third of a percent. Yes Bank, Asian Paints and Axis Bank were the prime gainers among heavy-weights, pushing Sensex higher. Likewise, Healthcare, Consumer Durables and IT have also elevated with gains on their respective front line stocks. Traders remained optimistic with a report that rising imports from China have taken a heavy toll on the employment-generation potential of the manufacturing sector, especially among the micro, small and medium enterprises (MSMEs). Adding to optimism PHD Chamber of Commerce and Industry Vice President D K Aggarwal stated that India is approaching towards $100 billion FDI inflow per annum by 2022 as volumes of foreign direct investment are increasing year after year. However, gains remained capped with a private report that India’s crude oil demand is forecast to grow to 500 million tonnes per year by 2040, but persistent increase in oil prices might act as a dampener for the rate of growth.

On the global front, Asian market were trading mixed, following the latest tit-for-tat tariffs in the China-US trade row, while investors are now looking ahead to the Federal Reserve's next policy meeting. Back home, in scrip specific development, Dilip Buildcon surged on emerging as L-1 bidder for Navnera Barrage (Dam) project. Besides, Himachal Futuristic Communications gained on receiving PO for Rs 558.36 crore from BSNL.

The BSE Sensex is currently trading at 36426.70, up by 121.68 points or 0.34% after trading in a range of 36064.10 and 36454.03. There were 16 stocks advancing against 14 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.34%, while Small cap index was down by 0.41%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.39%, Consumer Durables up by 0.82%, IT up by 0.63%, Auto up by 0.63% and TECK was up by 0.33%, while Telecom down by 1.57%, Utilities down by 0.80%, Realty down by 0.66%, Power down by 0.65% and Oil & Gas was down by 0.56% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 4.77%, Asian Paints up by 2.23%, Axis Bank up by 2.00%, Sun Pharma up by 1.72% and Maruti Suzuki was up by 1.57%. On the flip side, Bharti Airtel down by 2.15%, Power Grid down by 1.99%, Tata Steel down by 1.59%, Kotak Mahindra Bank down by 1.19% and ICICI Bank was down by 0.94% were the top losers.

Meanwhile, with higher fuel prices and Reserve Bank of India’s (RBI) intervention in forex market, the State Bank of India (SBI) Research in its latest report stated that the currency in circulation (CiC) has seen some slowdown in expansion since May. It added CiC increased exponentially after the note ban in November 2016 under which as many as 99.9% of them returned to the system. As per the report, CiC increased from Rs 9 trillion in January 2017 to Rs 19.5 trillion as of 14 September this year. But since the beginning of May 2018, the same has been in the range of Rs 19-19.6 trillion.

SBI Research said that one possible reason can be people may be cutting back discretionary spending with the recent spurt in fuel prices, mostly in rural areas. It also said the other factor could be to the extent RBI selling dollars directly from its foreign exchange reserves to designated dealers/banks thereby withdrawing rupee resources in return, thus reducing currency in circulation. However, it said such intervention, since taking place between banks, should not have major impact on systemic liquidity. It added that the third reason, though insignificant, could also be RBI replacing soiled notes.

The report further noted that the decline in CiC is a seasonal phenomenon but this time it seems the decline is more than just seasonal and has continued beyond August. The RBI’s weekly data for the last 10 years shows a pattern in CiC decline in the last fortnight of every July, which is partly explained by the low cash demand from the agriculture sector. The demand for currency increases after the monsoons as the harvesting begins in October followed by Rabi sowing, eventually giving rise to cash requirement. Besides, the festive season also brings along its natural demand, which gets accentuated with buying of gold, automobiles, increasing the demand for currency.

The CNX Nifty is currently trading at 10999.60, up by 32.20 points or 0.29% after trading in a range of 10882.85 and 11009.50. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 4.97%, Tech Mahindra up by 2.59%, Bajaj Finance up by 2.11%, Axis Bank up by 2.08% and Sun Pharma was up by 1.98%. On the flip side, Indiabulls Housing Finance down by 4.98%, HPCL down by 3.22%, BPCL down by 2.46%, Bharti Infratel down by 2.21% and Tata Steel was down by 1.91% were the top losers.

Asian market were trading mixed, Taiwan Weighted slipped 8.30 points or 0.08% to 10,964.11, Shanghai Composite dropped 21.15 points or 0.76% to 2,776.33 and Jakarta Composite was down by 28.05 points or 0.48% to 5,854.17.

On the other side, Straits Times gained 12.76 points or 0.39% to 3,231.92 and Nikkei 225 was up by 32.98 points or 0.14% to 23,902.91.