Benchmarks snap three-day losing streak; Nifty reclaims 11K mark

Snapping three days of losing streak, Indian equity benchmarks ended the Monday’s trade in green terrain with frontline gauges reclaiming their crucial 36,500 (Sensex) and 11,000 (Nifty) levels. After a weak start, the key indices remained lackluster for the most part of the trading session, impacted by India Meteorological Department’s (IMD) report stating that at the end of the four-month-long monsoon season this year, the rainfall recorded in the country as a whole has remained 9% short of the normal mark. Domestic sentiments were also pessimistic with the RBI’s report stating that India’s external debt declined 2.8% to $514.4 billion at June-end over the previous quarter on account of a decrease in commercial borrowings, short-term debt and non-resident Indian (NRI) deposits. Some concerns also came with a report that overseas investors pulled out a massive Rs 21,000 crore ($3 billion) from the capital markets in September, making it the steepest outflow in four months, on widening current account deficit amid global trade tensions.

However, the last hour buying by the traders coupled with positive macroeconomic data helped the key indices to recover their losses. Business activity in Indian manufacturing sector picked up in the month of September 2018, amid firmer gains in new orders, output and employment. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 52.2 in September from 51.7 in August. Besides, Goods and Services Tax (GST) mop-up rose to Rs 94,442 crore in September, from Rs 93,690 crore in the previous month. Adding some relief, ASSOCHAM’s latest report showed that India’s exports hold a promising outlook, with the US economy growing at its best in four years coupled with the rupee depreciation leading to enhanced net revenue realizations. The market participants took some support with the joint report between the International Monetary Fund (IMF), World Trade Organization (WTO) and World Bank stating that India's economic reforms and growth story provides compelling indication that openness in services contributes to long run growth performance.

On the global front, European markets were trading in green, despite Eurozone inflation accelerated in September on food and energy prices. As per flash data from Eurostat, inflation rose marginally to 2.1%, in line with expectations, from 2% a month ago. Asian markets ended mixed, as trade tensions lingered and two gauges of activity in China's manufacturing sector worsened in September, raising concerns about the demand outlook.

On the sectoral front, stocks related to telecom sector ended in red terrain, despite Fitch’s latest report that the new telecom policy will help companies in serving growing data needs, cut costs and reduce red tape. It added private telecom companies’ growth will be supported as the NDCP focuses to expand broadband coverage funded by the universal service obligation fund and in partnership with private telcos. However, metal stocks ended higher, after India's crude steel output increased 3.7% to 8.8 million tonne (MT) in August 2018. According to the World Steel Association (worldsteel), the country had produced 8.5 MT during the same month last year. Moreover, consumer durable stocks remained in limelight, amid reports that consumer durable makers expect a double-digit growth in sales this festive season despite a hike in customs duty as most of them have chosen to absorb the impact and not to pass it on to consumers.

Finally, the BSE Sensex gained 299.00 points or 0.83% to 36,526.14, while the CNX Nifty was up by 77.85 points or 0.71% to 11,008.30.

The BSE Sensex touched a high and a low of 36,616.64 and 35,960.65, respectively and there were 22 stocks advancing against 8 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index gained 0.53%, while Small cap index was down by 0.25%.

The top gaining sectoral indices on the BSE were IT up by 2.42%, TECK up by 2.02%, Power up by 1.83%, Utilities up by 1.64% and PSU was up by 1.60%, while Realty down by 1.44%, Energy down by 1.34%, Telecom down by 1.30%, Consumer Durables down by 0.77% and Capital Goods was down by 0.67% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 9.68%, Tata Motors - DVR up by 3.91%, TCS up by 3.26%, HDFC up by 3.16% and SBI up by 3.04%. On the flip side, Bharti Airtel down by 3.67%, Axis Bank down by 3.00%, Indusind Bank down by 2.25%, Reliance Industries down by 2.12% and Kotak Mahindra Bank down by 1.67% were the top losers.

Meanwhile, the joint report between the International Monetary Fund (IMF), World Trade Organization (WTO) and World Bank has stated that India's economic reforms and growth story provides compelling indication that openness in services contributes to long run growth performance. It noted that the reforms of the 1990s brought more openness, better regulation and greater investment, permitting Indian manufacturing firms to source services from a range of domestic and foreign providers operating in a more competitive environment.

The report titled ‘Reinvigorating Trade and Inclusive Growth' further said that manufacturers' access to better, more reliable, and more diverse business services enhanced firms' ability to invest in new opportunities and technologies, to concentrate production in fewer locations, to efficiently manage inventories, and to coordinate decisions with suppliers and customers.

Referring to a 2016 study, the report said that procompetitive reforms in banking, insurance, telecommunications and transport enhanced the productivity of both foreign and locally-owned manufacturing firms. It also said that other empirical studies support these findings, but also stress the significance of well-designed reforms accompanied by sound domestic regulation.

The CNX Nifty traded in a range of 11,035.65 and 10,821.55. There were 34 stocks in green as against 16 stocks in red on the index.

The top gainers on Nifty were Yes Bank up by 8.82%, Hindalco up by 6.25%, Indiabulls Housing Finance up by 4.11%, HDFC up by 3.45% and SBI up by 3.24%. On the flip side, Bharti Airtel down by 4.18%, HPCL down by 3.36%, Axis Bank down by 3.34%, Ultratech Cement down by 2.93% and Indusind Bank down by 2.43% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 8.78 points or 0.12% to 7,518.98, France’s CAC gained 17.11 points or 0.31% to 5,510.60 and Germany’s DAX was up by 77.36 points or 0.63% to 12,324.09.

Asian markets ended mixed on Monday as trade worries persisted and investors digested weak data from China and Japan. China's official manufacturing purchasing managers index stood at 50.8 in September versus 51.3 in August, raising concerns about the demand outlook. The Caixin manufacturing PMI declined to 50 from 50.6, the lowest since May 2017. While, a key quarterly economic survey by the Bank of Japan showed that business confidence among large Japanese manufacturers declined for the third straight quarter. Separately, the latest survey from Nikkei revealed that the manufacturing sector in Japan continued to expand at a steady pace in September, with a manufacturing PMI score of 52.5, unchanged from the previous month. However, Japanese shares ended higher on earnings optimism, and as the yen extended its weakening trend on news of a new agreement between the US and Canada to replace NAFTA. Markets in China and Hong Kong were closed for holidays.