Markets close volatile session on optimistic note

Markets managed to close volatile session on optimistic note on Monday, as both the larger peers, Sensex and Nifty logged the gains of 0.38% each. The markets started on the cautious note, amid weak macro-economic data. India’s industrial production measured by Index of Industrial Production (IIP) slowed down to a three-month low of 4.3% in the month of August 2018, as compared to 6.6% in the previous month and 4.8% in the same of last year, while retail inflation based on Consumer Price Index (CPI) inched up to 3.77% in the month of September 2018, as compared to a 10-month low of 3.69% recorded in August 2018 and 3.28% in September 2018. Sentiments were pessimistic with SEBI’s data report that capital garnered by Indian companies through issuance of shares to institutional investors dived by 78% to Rs 7,000 crore during the April-August period of the financial year 2018-19 as compared to Rs 31,153 crore raised during the corresponding period of the previous financial year. Traders also took a note of Reserve Bank of India’s (RBI’s) data report that the country’s foreign exchange reserves declined by $915.8 million to $399.609 billion in the week to October 5 on account of a fall in foreign currency assets.

The trade remained lackluster, after India’s Wholesale price index (WPI) inflation also halted two-month easing trend in the month of September 2018, coming in line with rising retail inflation. As per the latest data released by the government, WPI surged to 5.13% in September from 4.53% in August and 3.14% during the corresponding month of the previous year. Adding some concerns, rating agency Moody’s in its latest report said that Non-bank financial institutions (NBFI) will be significantly impacted if the liquidity distress in the country’s capital markets, triggered by the default in September 2018 of IL&FS, prolongs for an extended period of time. However, in the last leg of the trade, the key indices erased all of their losses to settle the day in green terrain, supported by SBI Ecowrap report that the RBI is not expected to hike key lending rates in the current fiscal. The market participants got relief with credit rating agency Crisil Research’s report expecting the corporate revenue growth to grow by around 12% for the quarter ended September 30, 2018. This would mark the fourth consecutive quarter of double-digit growth.

On the global front, European markets were trading mixed, as Germany's consumer price inflation accelerated to its highest level in nearly seven years in September. According to the final data from Destatis, consumer prices advanced 2.3% on year, the fastest since November 2011, when inflation was 2.4%. Prices had advanced only 2% in August. Asian markets ended in red, even though China's exports grew more-than-expected in September despite the worsening trade dispute with the US, but the increase in imports slowed, reflecting softening domestic demand. As per figures from the Customs Administration, exports grew 14.5% year-on-year in September, faster than the 9.8% increase seen in August and the expected increase of 8.8%. At the same time, imports advanced 14.3% annually compared to the forecast of 12.4% and August's 19.9% rise. As a result, the trade surplus increased to around $32 billion in September, but below the forecast of $38 billion.

Back home, on the sectoral front, banking sector stocks ended lower despite RBI’s data showing that bank credit rose by 12.51% to Rs 89.82 lakh crore in the fortnight ended September 28, while the deposits grew by 8.07% to Rs 117.99 lakh crore. Further, stocks related to telecom sector remained in focus with telecom industry body, the Cellular Operators’ Association of India’s (COAI) statement that the import duty hike on certain communication products will increase industry’s import costs by about 10% adding to financial woes, but asserted that operators are fully aligned to the interest of the nation.

Finally, the BSE Sensex surged 131.52 points or 0.38% to 34,865.10, while the CNX Nifty was up by 40.00 points or 0.38% to 10,512.50.

The BSE Sensex touched a high and a low of 35,008.65 and 34,559.98, respectively and there were 13 stocks advancing against 17 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.62%, while Small cap index was up by 1.37%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.22%, IT up by 2.17%, TECK up by 1.96%, Telecom up by 1.09% and Energy up by 0.99%, while Consumer Durables down by 1.21%, Auto down by 0.46%, Metal down by 0.36%, Consumer Disc down by 0.36% and Bankex down by 0.31% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.95%, ITC up by 2.51%, ONGC up by 1.78%, TCS up by 1.60% and Sun Pharma up by 1.50%. On the flip side, Hindustan Unilever down by 2.68%, Mahindra & Mahindra down by 2.63%, ICICI Bank down by 1.76%, Vedanta down by 1.52% and Axis Bank down by 1.51% were the top losers.

Meanwhile, bank credit grew by 12.51 percent to Rs 89.82 lakh crore in the fortnight ended September 28, while the deposits rose by 8.07 percent to Rs 117.99 lakh crore. According to the recent RBI data, in the year-ago fortnight, advances stood at Rs 79.83 lakh crore, while the deposits at Rs 109.17 lakh crore.

Data further indicated that during the fortnight ended September 14, bank credit had risen by 13.46 percent to Rs 87.98 lakh crore, while the deposits grew by 8.58 per cent to Rs 115.70 lakh crore. It also noted that in August this year, non-food bank credit increased by 12.4 percent compared with an increase of 5.5 per cent in the year-ago month. It added that loans to industry rose by 1.9 percent in August, against a contraction of 0.3 per cent in August 2017.

As per to the data, advances to agriculture and allied activities were up by 6.6 percent, compared with an increase of 6.5 percent in the same month last year. Besides, services sector advances expanded by 26.7 percent compared with 5 percent last year. It also showed that personal loans rose by 18.2 percent in August 2018, against 15.7 percent in August last year.

The CNX Nifty traded in a range of 10,526.30 and 10,410.15. There were 25 stocks in green as against 25 stocks in red on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 4.76%, Cipla up by 3.97%, Infosys up by 3.64%, HINDALCO up by 2.56% and ITC up by 2.34%. On the flip side, Hindustan Petroleum Corporation down by 2.84%, Bajaj Finserv down by 2.64%, Hindustan Unilever down by 2.49%, Mahindra & Mahindra down by 2.42% and GAIL India down by 2.31% were the top losers.

European markets were trading mixed, UK’s FTSE 100 rose 7.51 points or 0.11% to 7,003.42 and Germany’s DAX was up by 37.98 points or 0.33% to 11,561.79, while France’s CAC was down by 6.09 points or 0.12% to 5,089.89.

Asian markets ended in red on Monday as worries about global trade and higher US interest rates lingered. A growing feud between the US and Saudi Arabia over the disappearance of a prominent Saudi journalist also weighed on investors' risk appetite. Chinese shares tumbled to extend last week's rout as traders remained on edge ahead of European Union summit, the Federal Open Market Committee's (FOMC) September meeting minutes and a slew of domestic data, due this week. Further, Japanese shares hit eight-week lows, with automakers coming under heavy selling pressure after reports that the US is seeking currency chapters in trade talks with Japan that would contain a provision about currency manipulation. Investors also digested news that Prime Minister Shinzo Abe will go ahead with an increase in the consumption tax to 10 percent from the current 8 percent in October 2019.