Post Session: Quick Review

Snapping a three-session losing run, Indian equity benchmarks ended Monday’s trade on an optimistic note, with Sensex and Nifty closing near their crucial 34,500 and 10,350 levels, respectively. It was a volatile day of trade as the markets swung between red and green terrain, however, a sharp recovery in financials in the dying hours of trade helped indices close in the green. Markets made a pessimistic start, tracking feeble global cues. Sentiments remained downbeat with Exporters’ body Federation of Indian Export Organisations’ (FIEO) statement that the rupee depreciation is increasing the cost of imported capital goods, inputs and various services used by exporters paid in foreign currency, particularly the freight charges. Traders also reacted negatively to the Reserve Bank of India’s (RBI) statement that the Centre and states should stick to the fiscal deficit target as any slippage will have an adverse bearing on inflation and increase market volatility. Some concerns also came with reports that Indian companies raised Rs 12,470 crore through initial public offerings (IPOs) in April-September this fiscal, a plunge of 53% from the year-ago period, mainly due to volatile equity markets and uncertainties in macro environment.

However, key indices pared all of their losses and staged recovery in the dying hours of trade, as traders took some solace from department of economic affairs secretary Subhash Chandra Garg’s statement that the rupee is expected to revert to a more reasonable value soon and the government is ready with measures if required. Some support also came with World Bank’s report that growth in India is firming up and projected to accelerate to 7.3% in the 2018-19 fiscal and 7.5% in the next two years. Adding some optimism among the investors, investments in the Indian capital market through participatory notes climbed to Rs 84,647 crore till August-end, making it the first rise in such fund infusion in 10 months.

On the global front, Asian markets ended mostly lower on Monday, while European markets were trading in red, as another strong US jobs reading further fanned expectations the Federal Reserve will hike interest rates at a quicker pace. Back home, select Chemical industry related stocks ended higher, with a report that the country's chemical industry is expected to grow at around 9% per annum to reach $304 billion by FY25, from $163 billion in FY18. The growth is likely to be driven by rising demand in end-use segments for specialty chemicals and petrochemicals intermediates. Infrastructure sector was in focus with Commerce and Industry Minister Suresh Prabhu stating there is a need to work on innovative instrument and structure to attract global money for investment in infrastructure sector.

The BSE Sensex ended at 34475.49, up by 98.50 points or 0.29% after trading in a range of 33974.66 and 34636.43. There were 15 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index dipped 1.98%, while Small cap index was down by 1.96%.(Provisional)

The top gaining sectoral indices on the BSE were Energy up by 4.31%, Oil & Gas up by 3.16%, PSU up by 1.21%, Bankex up by 1.11% and Auto up by 0.55%, while Realty down by 3.38%, Metal down by 2.85%, Basic Materials down by 1.79%, Capital Goods down by 1.66% and Industrials down by 1.48% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Yes Bank up by 6.81%, Reliance Industries up by 5.29%, Hero MotoCorp up by 4.64%, Kotak Mahindra Bank up by 3.79% and SBI up by 3.57%. (Provisional)

On the flip side, Vedanta down by 10.93%, HDFC down by 2.59%, Wipro down by 2.24%, Axis Bank down by 1.79% and Tata Motors - DVR down by 1.75% were the top losers. (Provisional)

Meanwhile, expressing optimism on India’s growth, the World Bank in its latest report on South Asia has said that the country’s growth is firming up. It projected that Gross Domestic Product (GDP) growth will accelerate to 7.3% in the fiscal 2018-19 and 7.5% in the next two years with stronger private spending and export growth as the key drivers. It added that the Indian economy appears to have recovered from the temporary disruptions caused by demonetisation and the introduction of the Goods and Services Tax (GST). Though, it also said domestic risks and a less benign external environment impact the macro-economic outlook.

With a significant acceleration in recent months, the report said the country’s growth reached 6.7% in fiscal year 2017-18. On the production side, it said the turnaround in the second half was led by manufacturing (that grew at 8.8% versus 2.7% in the first half). Agriculture growth improved, and services growth held steady at 7.7%. On the demand side, the pick-up in growth was reflected in a sharp acceleration in gross fixed capital formation to 11.7% in the second half, from 3.4% in the first.

According to the report, consumption, growing at 7% in the second half, remained the major driver of growth.  It said external headwinds - monetary policy 'normalisation' in the US coupled with recent stress in some Emerging Market and Developing Economies - have triggered portfolio outflows from April 2018 onwards. It said that as a result, the nominal exchange rate depreciated by about 12% from January to September 2018, and foreign reserves declined by over 5% since March, while remaining comfortable at about nine months of imports. Of the view that India faces continued internal and external risks, it said that high oil prices and an uncertain global trade environment may pose challenges for the current account.

On the current account deficit (CAD) front, the World Bank said a widening trade deficit is likely to lead to a CAD of around 2.6% of the GDP in fiscal year 2018-19, and tighter global financing conditions will put added emphasis on India's ability to attract Foreign Direct Investment (FDI). Besides, fiscal consolidation is expected to resume in fiscal year 2018-19, but slippages could happen on both the revenue side (as the GST is still stabilising) and the expenditure side (ahead of state and federal elections). It added that elevated oil prices, a recent hike in agricultural support prices and further exchange rate depreciation could keep the inflation outlook challenging, possibly resulting in further monetary policy actions.

The CNX Nifty ended at 10348.10, up by 31.65 points or 0.31% after trading in a range of 10198.40 and 10398.35. There were 26 stocks advancing against 24 stocks declining on the index. (Provisional)

The top gainers on Nifty were HPCL up by 8.45%, Yes Bank up by 7.16%, Indian Oil up by 5.72%, Reliance Industries up by 5.66% and Hero MotoCorp up by 4.77%. (Provisional)

On the flip side, Vedanta down by 10.43%, Hindalco down by 7.36%, Bajaj Finance down by 2.95%, Tech Mahindra down by 2.73% and Dr. Reddys Lab down by 2.52% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 28.22 points or 0.39% to 7,290.32, France’s CAC fell 34.73 points or 0.65% to 5,324.63 and Germany’s DAX dropped 68.84 points or 0.57% to 12,043.06.

Asian markets ended mostly in red on Monday as strong US jobs data for September added to worries about rising interest rates and investors brushed aside central bank policy loosening in China. Chinese shares ended lower, as investors back from a long holiday dumped shares across the board despite Beijing’s weekend move to spur more lending at a time of growing fears the economic impact of the Sino-US trade war will deepen. Meanwhile, China's private sector logged a moderate growth in September as improved services activity was offset by softer manufacturing growth, survey data from IHS Markit showed. The Caixin composite output index rose marginally to 52.1 from 52.0 in August. The services PMI signaled the strongest increase in activity for three months, while manufacturing production showed a marginal pace of expansion that was the weakest since October 2017. The Japanese market was closed for the Health-Sports day holiday.