Markets extend northward journey for third straight session

Key Indian benchmarks extended northward journey for the third straight session and ended the Tuesday’s trading session in green territory, amid positive earnings optimism among traders. The markets made a firm start to remain bullish throughout the session, aided by the United Nations Conference on Trade and Development’s (UNCTAD) latest report indicating that in South Asia, India attracted $22 billion of foreign direct investment (FDI) flows, contributing to the subregion’s 13% rise in FDI in the first half of 2018 (H1 2018). Adding some optimism, 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.

Optimism continued on the street, 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. The street took note of Finance Minister Arun Jaitley’s statement that India needs a strong and decisive leadership at the Centre to continue its high growth path and take swift decisions. Investors also took some support with a report that Foreign Institutional Investors (FIIs) bought shares worth Rs 67.86 crore on October 15, 2018, as per provisional data from the stock exchanges.

On the global front, European markets were trading in green, amid reports that German manufacturers added more employees during August compared to a year ago. The preliminary figures the Federal Statistical Office showed that the number of employees in the manufacturing units with 50 or more persons grew by about 149,000 persons or 2.7% from the same period last year to 5.7 million. Besides, UK wages grew faster than expected in August. The Average Earnings Index, with bonuses included, stood at 2.7% in the month, up from 2.6% in the previous month. The jobless rate held at a 43-year low of 4%. Asian markets ended in green, as China's factory-gate inflation cooled for a third straight month in September, pointing to softening domestic demand but giving the country's central bank plenty of room for adjustments in interest rates.

Back home, on the sectoral front, 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. Metal stocks also gained after global industry body World Steel Association said that India’s steel demand is expected to move back to a higher growth track as the country recovers from twin shocks of demonetisation and GST implementation. Further, non-bank financial companies (NBFCs) stocks remained in focus with Moody’s Investors Service’s statement that Indian NBFCs 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, while stocks related to solar power remained in limelight with a private report stating that India installed 4.9 GW of solar power, consolidating its position as the second largest solar market in the world, during the first half of calendar year 2018.

Finally, the BSE Sensex surged 297.38 points or 0.85% to 35,162.48, while the CNX Nifty was up by 72.25 points or 0.69% to 10,584.75.

The BSE Sensex touched a high and a low of 35,215.79 and 34,913.06, respectively and there were 21 stocks advancing against 10 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 1.14%, while Small cap index was up by 1.68%.

The top gaining sectoral indices on the BSE were Energy up by 1.95%, Oil & Gas up by 1.84%, Realty up by 1.36%, Industrials up by 1.33% and PSU up by 1.28%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.97%, Adani Ports & SEZ up by 3.54%, ONGC up by 3.44%, SBI up by 2.60% and ICICI Bank up by 2.51%. On the flip side, HDFC Bank down by 0.77%, Bajaj Auto down by 0.54%, Maruti Suzuki down by 0.45%, Infosys down by 0.39% and Indusind Bank down by 0.37% were the top losers.

Meanwhile, the capital markets regulator, Securities and Exchange Board of India’s (SEBI) latest data showed that Indian listed companies fund raising through private placement of corporate bonds declined sharply by 37.96% in April-September period of current fiscal year (H1FY19).

According to the data, companies listed on the BSE and NSE garnered Rs 2.01 lakh crore from debt on a private placement basis in the first six months of FY19 as compared to Rs 3.24 lakh crore raised in April-September period of 2017-18. In terms of numbers, 1,173 issues were made in April-September this fiscal, as compared to 1,459 in the year-ago period.

The data showed that the funds have been raised mainly for business expansion, to support working capital requirements and retire their existing debt. In private placement of bonds, firms issue securities or bonds to institutional investors to raise capital. In the entire 2017-18 fiscal, the capital raked in through the route stood at Rs 6 lakh crore.

The CNX Nifty traded in a range of 10,604.90 and 10,525.30. There were 31 stocks in green as against 19 stocks in red on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 4.01%, Adani Ports & SEZ up by 4.00%, ONGC up by 3.22%, Tech Mahindra up by 2.94% and SBI up by 2.72%. 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 Infosys down by 0.97% were the top losers.

European markets were trading mostly in green, France’s CAC added 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. On the flip side, UK’s FTSE 100 was down by 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.