Post Session: Quick Review

Indian equity benchmarks ended Tuesday’s trade on high note that marked a third straight day of gain for the markets, amid expectations that companies will report robust earnings for the second quarter ended September 30. The markets made a gap-up opening and traded in fine fettle, as traders took some encouragement with report that India’s trade deficit declined to a five-month low in September even as exports contracted, providing some respite from the rising gap that has sparked concern about the current account deficit (CAD). Trade deficit declined to $13.98 billion in September from $17.39 billion in August following slower growth in imports. Besides, exports were pegged at $27.95 billion in September, down 2.15% from a year ago, while imports rose 10.45% to $41.9 billion, lowest in five months. Investors continued to take support with a report that Saudi Arabia committed to meeting India’s rising oil demand and said it is keen to invest in fuel retailing and petrochemical business in the world’s fastest-growing energy consumer. 

However, the markets fell from their day’s highs in the second half of the day, as market-men got anxious with private report that merchandise exports witnessed the worst contraction in 26 months in September despite a weak rupee, thanks mainly to an unfavourable base. But, Key indices regained traction to end higher, as optimism remained among traders, with a private report stating that strong earnings, promising demographics and big ticket deals drove the M&A activity, clocking deals worth $76 billion in January-September from over 350 transactions. Some support also came with reports that India and the UAE deliberated on opportunities for cooperation and investment in both the countries, in order to drive investments in areas including highways, airports and infrastructure.

On the global front, Asian markets ended mixed in cautious trade on Tuesday, amid lingering global trade tensions and rising geopolitical risks in the Middle East. European markets were trading mostly in green. Back home, select sugar stocks ended in green on expectation that the government will take steps to boost ethanol production. Oil companies stocks ended higher, aided by OPEC’s secretary general’s statement that India’s oil demand is expected to rise by 5.8 million barrels per day (bpd) by 2040, accounting for about 40% of the overall increase in global demand during the period.

The BSE Sensex ended at 35145.80, up by 280.70 points or 0.81% after trading in a range of 34913.06 and 35215.79. There were 22 stocks advancing against 9 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index surged 1.13%, while Small cap index was up by 1.64%. (Provisional)

The top gaining sectoral indices on the BSE were Energy up by 2.00%, Oil & Gas up by 1.72%, Industrials up by 1.29%, Realty up by 1.25% and PSU up by 1.15%.  (Provisional)

The top gainers on the Sensex were Adani Ports &SEZ up by 3.93%, Mahindra & Mahindra up by 3.87%, ONGC up by 3.22%, SBI up by 2.62% and Axis Bank up by 2.26%.  (Provisional)

On the flip side, HDFC Bank down by 0.83%, Bajaj Auto down by 0.60%, Infosys down by 0.59%, Maruti Suzuki down by 0.59% and Power Grid down by 0.42% were the top losers. (Provisional)

Meanwhile, expressing concerns over economic growth, global rating agency Moody’s Investors Service in its latest report has stated that non-bank financial companies (NBFCs) are likely to be impacted significantly if the liquidity situation in the country's capital markets, triggered by Infrastructure Leasing & Financial Services (IL&FS) default, continues to remain tight. Also, this will be negative for the broader economy and structured finance sector. Infrastructure Leasing & Financial Services (IL&FS) and its subsidiaries are facing liquidity crisis and has defaulted on debt repayment. The default by IL&FS has also impacted other NBFCs and also mutual fund players.

According to the report, liquidity tightness could lead to sharply higher financing costs for Non-bank financial institutions (NBFIs), or even difficulty in rolling over their liabilities, because these companies have relied heavily on market borrowing to fund asset growth. Any effects on the NBFIs will spill over to the broader economy mainly through the credit channel because NBFIs are a material provider of credit for the economy, with outstanding loans/Gross Domestic Product (GDP) at end March 2018 registering 13% versus banking system loans/GDP of 52%.

As a result, Moody’s said a slowdown in credit growth provided by NBFIs will dampen overall consumption and economic growth. The report said NBFIs' liquidity management practices suggests that these companies are capable of coping with multi-week liquidity distress, but a prolonged period of liquidity stress will severely weaken the NBFIs' credit standings. It added that there will not be a significant impact on the credit quality of the country's structured finance sector, nor performance of asset-backed securities (ABS).

The CNX Nifty ended at 10576.60, up by 64.10 points or 0.61% after trading in a range of 10525.30 and 10604.90. There were 31 stocks advancing against 19 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports &SEZ up by 4.12%, Mahindra & Mahindra up by 4.01%, ONGC up by 3.22%, Tech Mahindra up by 2.94% and SBI up by 2.68%.  (Provisional)

On the flip side, Indiabulls Housing Finance down by 5.15%, Eicher Motors down by 1.34%, Cipla down by 1.21%, JSW Steel down by 1.21% and HDFC Bank down by 0.92% were the top losers. (Provisional)

European markets were trading mostly in green, France’s CAC increased 4.09 points or 0.08% to 5,099.16 and Germany’s DAX increased 24.22 points or 0.21% to 11,638.38, while UK’s FTSE 100 decreased 18.37 points or 0.26% to 7,010.85.

Asian markets ended mixed in cautious trade on Tuesday amid lingering global trade tensions and rising geopolitical risks in the Middle East. Investors also waited to take cues from upcoming corporate earnings results and the minutes of the US Federal Reserve's latest policy meeting, due Wednesday. Chinese shares ended lower after the release of inflation data. Consumer prices in China were up 2.5 percent year-on- year in September, the National Bureau of Statistics said. That was in line with expectations and up from 2.3 percent in August. The statistics bureau also said that producer prices climbed an annual 3.6 percent - exceeding forecasts for 3.5 percent and down from 4.1 percent in the previous month. Meanwhile, Japanese shares rallied as bargain hunters lapped up index heavyweights in an oversold market.