Local equities erase early losses to trade in green

Local equity benchmarks erased all of their early losses and entered into positive trajectory, as Energy and Oil & Gas companies stock started gaining momentum on the streets, with frontline gauges recapturing their crucial 10,300 (Nifty) and 34,400 (Sensex) levels. 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 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. Meanwhile, Reserve Bank reported that the hike in minimum support prices (MSP) for kharif crop announced in July by the Narendra Modi Government was ‘well below’ the ones effected under the previous UPA Governments in 2008-09 and 2012-13. However, traders shrugged off a private report that foreign investors have pulled out over Rs 9,300 crore ($1.3 billion) from the Indian capital markets in the last four trading sessions on unabated fall in rupee and rise in crude oil price.

On the global front, Asian markets were trading in mostly in red, as investors assessed the latest move by the People’s Bank of China to loosen monetary policy. Japan was shut for a holiday, and Columbus Day in the US means no Treasuries trade. Back on domestic turf, on the sectoral front, Chemical industry related stocks were trading in mostly in green, 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.

The BSE Sensex is currently trading at 34434.27, up by 57.28 points or 0.17% after trading in a range of 34031.98 and 34466.00. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.64%, while Small cap index was down by 0.55%.

The top gaining sectoral indices on the BSE were Energy up by 3.01%, Oil & Gas up by 2.84%, PSU up by 1.30%, Bankex up by 0.60% and Utilities was up by 0.55%, while Metal down by 2.06%, Basic Materials down by 1.46%, Realty down by 1.38%, Capital Goods down by 0.62% and Telecom was down by 0.57% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.66%, Reliance Industries up by 3.39%, ONGC up by 1.94%, SBI up by 1.76% and Asian Paints was up by 1.75%. On the flip side, Vedanta down by 5.13%, HDFC down by 2.18%, Wipro down by 2.06%, Tata Steel down by 1.80% and TCS was down by 1.00% were the top losers.

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 is currently trading at 10331.65, up by 15.20 points or 0.15% after trading in a range of 10201.95 and 10341.05. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were HPCL up by 6.24%, Indian Oil Corporation up by 5.42%, Yes Bank up by 3.86%, Reliance Industries up by 3.66% and Indiabulls Housing Finance was up by 3.21%. On the flip side, Vedanta down by 5.03%, Hindalco down by 5.00%, Wipro down by 2.17%, HCL Tech down by 2.02% and HDFC was down by 1.82% were the top losers.

Asian markets were trading in mostly in red, KOSPI slipped 8.28 points or 0.37% to 2,259.24, Hang Seng declined 160.64 points or 0.61% to 26,411.93, Taiwan Weighted dropped 105.34 points or 1.01% to 10,411.78, Straits Times fell 18.52 points or 0.58% to 3,191.27 and Shanghai Composite was down by 83.31 points or 3.04% to 2,738.04.

On the other side, Jakarta Composite was up by 22.19 points or 0.39% to 5,754.13.