Benchmarks snaps four days of losses

After four days of losses, the equity benchmarks rebounded on Wednesday to end the trading session in green terrain, mirroring positive cues from European markets. The markets made a gap-up opening and remain firm for the most part of the session, as street got comfort with a report stating that government is responding well to the rising trade tensions between the world's two largest economies, maintaining a stance that serves the cause of Indian exporters best.  Adding some optimism, Asian Development Bank’s (ADB) latest report said that greenfield or new investments generated some 667,000 jobs in 2017-mainly in India, the PRC, Viet Nam, the Philippines, and Singapore-in real estate, software and information technology (IT) services, and electronic components, among others. Traders took note of the commerce ministry’s statement that it is important to resume long-stalled talks for the proposed free trade agreement (FTA) between India and the European Union (EU) at the earliest and without any pre-conditions, in order to boost trade and investment.

In the last leg of the trade, the markets gave up all the gains to enter in the red, amid reports that Private Equity (PE) investments moderated to $14.60 billion during January-September period, owing to macroeconomic concerns, market volatility and valuations of companies. Some concerns also came with a private report which stated that the Indian growth story has been far from perfect. That is not an understatement by any stretch of imagination. A growing challenge for the economy is the fast-evolving problem of inequality. But, the volatility was for the short period, as the key indices recovered to settle the day in green, supported by the Directorate General of Foreign Trade (DGFT)’s statement that India relaxed some restrictions on imports of petcoke for use as feedstock in some industries. Meanwhile, the Insolvency and Bankruptcy Board of India (IBBI) notified the mechanism to be followed for issuing regulations under the insolvency law. A set of procedures would be followed for making or amending regulations under the Insolvency and Bankruptcy Code (IBC).

On the global front, European markets were trading in green, despite Germany's producer prices rose at the fastest pace in a year in September. The figures from Destatis showed that producer prices grew 3.2% year-on-year in September, after rising 3.1% in the previous month. The street also overlooked reports that British factory orders dropped at the fastest pace in three years in the quarter to October as manufacturers remained worried about the possibility of a disorderly Brexit. The survey among 354 manufacturers showed that a net 6% reported a fall in new orders in the quarter to October, which was the weakest balance since October 2015. Asian markets ended mixed as investors tracked the overnight losses on Wall Street following a negative reaction to corporate earnings results and as crude oil prices tumbled to two-month lows.

Back home, aviation stocks ended higher, aided by the Directorate General of Civil Aviation’s date report showing that the domestic air passenger count has gone up by 18.95% in the month of September 2018. As per the report, domestic airlines flew 113.98 lakh passengers in September 2018, as against 95.83 lakh passengers carried in the same month of last year. Besides, stocks related to metal companies gained, despite a study report indicated that lack of reciprocity in India’s existing free trade agreements (FTA), inverted duty structure, hidden subsidies in Asian economies like cheap electricity provision and non-tariff barriers in developed countries have hit India’s exports of refined. Pharma stocks remained in focus, with ICRA in its latest report said that the growth trajectory for the Indian pharmaceutical industry is likely to be moderate at 7-9% in the period between FY18 and FY21, on the back of healthy demand from the domestic market given increasing spend on healthcare along with improving access, though constrained by regulatory interventions and slowing growth from the US given the relatively moderate growth prospects.

Finally, the BSE Sensex surged 186.73 points or 0.55% to 34,033.96, while the CNX Nifty was up by 77.95 points or 0.77% to 10,224.75.

The BSE Sensex touched a high and a low of 34,300.97 and 33,726.07, respectively and there were 17 stocks advancing against 14 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained by 0.95%, while Small cap index was up by 0.74%.

The top gaining sectoral indices on the BSE were Telecom up by 4.93%, Realty up by 3.69%, Oil & Gas up by 2.21%, Consumer Durables up by 1.62% and Capital Goods up by 1.19%, while Healthcare down by 0.30%, IT down by 0.22% and Power down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 10.79%, Asian Paints up by 4.49%, Indusind Bank up by 3.21%, HDFC up by 3.02% and Hindustan Unilever up by 2.06%. On the flip side, Yes Bank down by 4.52%, Bajaj Auto down by 4.30%, Adani Ports & SEZ down by 1.40%, NTPC down by 1.18% and Infosys down by 1.17% were the top losers.

Meanwhile, Union Steel Minister Chaudhary Birender Singh has said that foreign firms can immensely benefit by setting up manufacturing units in India, as the country has set up a target to ramp up its steel-making capacity to 300 million tonne (MT) by 2030-31. He also said that Indian steel industry is expected to invest $128 billion in next 10-12 years for adding the new capacity, for this, he pointed out that India will have to import a large number of critical plants and equipment worth almost $25 billion to meet the needs of domestic steel industry by 2030-31.

The minister said that spares worth over $500 million will have to be imported every year to meet the needs of India's steel industry by 2030-31. He noted that the opportunity offered by Indian steel industry must be utilised by the capital goods manufacturers, foreign technology providers and equipment manufacturers. Besides, he noted that foreign companies can set up manufacturing facilities in India on their own or through joint venture/ collaboration with Indian capital goods manufacturers. Stating that it will be a win-win situation, he said the multinational companies will bring fresh investments and latest technology to produce equipment and spares of world class quality at a global competitive rate.

Singh further stated that India can also save a lot of foreign exchange if the steel industries get their required machines and equipment from within the country instead of depending on the foreign based industries. He also said that the foreign manufacturers will enter into a JV with an Indian firm can get advantage of purchase preference. He noted that Indian manufacturers will also benefit from foreign investment and technology and also get to fulfil the eligibility condition of experience.

The CNX Nifty traded in a range of 10,290.65 and 10,126.70. There were 31 stocks in green as against 19 stocks in red on the index.

The top gainers on Nifty were Bajaj Finance up by 11.97%, Bharti Airtel up by 8.97%, HPCL up by 6.08%, Indian Oil Corporation up by 5.77% and Hindalco up by 5.01%. On the flip side, Bajaj Auto down by 4.54%, Yes Bank down by 4.15%, Dr. Reddy’s Lab down by 2.17%, Grasim Industries down by 2.12% and Adani Ports & SEZ down by 1.82 % were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 41.59 points or 0.59% to 6,996.80, France’s CAC added 32.13 points or 0.64% to 4,999.82 and Germany’s DAX was up by 42.73 points or 0.38% to 11,317.01.

Asian markets ended mixed on Wednesday as traders mulled over the impact of tariffs on corporate America, after big industrial companies admitted that they were facing rising costs. The US-China trade war, Italian government finances and US-Saudi tensions also remained in focus for markets. Japanese shares ended higher after a survey showed activity in Japan's manufacturing sector expanded at a faster rate in October. The flash Markit/Nikkei manufacturing PMI rose to a seasonally adjusted 53.1 from a final 52.5 in September, as new export orders returned to growth. Meanwhile, Chinese shares ended higher as robust earnings partly offset ongoing concerns over pledged share risks and economic growth.