Markets end flat ahead of Muhurat Trading

Indian equity benchmarks managed to end Tuesday’s session on positive note, despite mixed cues from global markets. The markets made a cheerful opening with a private report stating that the government has generated higher-than-expected revenues from customs duties, which may help it rein in the fiscal deficit within its FY19 target of 3.3% of gross domestic product (GDP). Optimism spread among the markets participants, with rating agency Crisil’s report that the rupee may appreciate to 71 against the dollar by March 2019 on positives like the dip in crude prices and the $75-billion currency swap with Bank of Japan. Some relief came from S&P Global Ratings’ latest report indicating that most of its rated Indian firms and banks can survive the recent sharp fall in the rupee since their overseas borrowings either have dollar-linked earnings or are hedged. Market participant also took note of a report stating that over 100 Indian investors participated in a business conference in the UAE to strengthen Sharjah’s trade relations with India and to promote the Gulf emirate as a leading business and investment hub in the region.

In the last leg of trade, the key indices turned volatile, as Finance Minister Arun Jaitley said that excessive competition at times can result in stress in a particular sector. He also said that with the growing economy, the role of each regulator will expand. But, the markets managed to end higher, with taking support from the Textiles Minister Smriti Irani’s statement that the Indian economy would become bigger and stronger than the British economy in the next couple of years and added that the country is moving towards economic empowerment. Some support also came with the Union Minister for Finance and Corporate Affairs Arun Jaitley’s statement that fair and Transparent Public Procurement will protect the revenues of the State and make sure that they are used for optimal purpose. Investors’ sentiments remained optimistic with report stating that the United States snapped sanctions back in place to choke off Iran's oil and shipping industries, while temporarily allowing top customers such as China and India to keep buying crude from the Islamic Republic.

On the global front, European markets were trading in red, as Eurozone's investor sentiment eroded for a third consecutive month in November to its lowest level in two years. The survey data from Sentix showed that the Sentix investor confidence indicator dropped to 8.8 from 11.4 in October. The latest reading was the lowest since October 2016. Adding some worries, the UK service sector registered its slowest rate of expansion in seven months in October. As per survey results from IHS Markit and the Chartered Institute of Procurement & Supply, the services Purchasing Managers' Index dropped more-than-expected to 52.2 in October from 53.9 in September. Asian markets ended mixed, as China's private sector expanded at the weakest pace in more than two years in October with both services and manufacturing noting weaker performances. The survey results from IHS Markit showed that the Caixin composite output index fell to a 28-month low of 50.5 in October from 52.1 in September.

Back home, airlines stocks ended lower, despite reports that the government has invited bids from interested operators for the third round of auctions for the Udan scheme, which is a subsidised low fare initiative to connect small cities and to help more masses fly. However, shares of Jet Airways gained amid reports that Tata Group is in talks to buy a majority stake in beleaguered carrier and its loyalty programme. Stocks from power sector ended lower,  despite report that average spot power price at Indian Energy Exchange (IEX) rose 45.5% in October at Rs 5.94 per unit over Rs 4.08 per unit in the year-ago month. IEX witnessed highest ever sales volume of 7,125 million units (MU) during the month due to higher demand, coal shortage, lower wind and hydro power generation. Further, stocks related to NBFCs were in focused with Corporate Affairs Secretary Injeti Srinivas’s statement that non-banking financial companies, particularly housing finance firms, are facing liquidity issues but there is no crisis.

Finally, the BSE Sensex surged 40.99 points or 0.12% to 34,991.91, while the CNX Nifty was up by 6.00 points or 0.06% to 10530.00.

The BSE Sensex touched a high and a low of 35,196.03 and 34,889.72, respectively and there were 17 stocks advancing against 15 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index plunged 0.62%, while Small cap index was down by 0.06%.

The top gaining sectoral indices on the BSE were TECK up by 1.03%, IT up by 0.99%, Telecom up by 0.94%, Energy up by 0.60% and Realty up by 0.40%, while Consumer Durables down by 1.79%, Metal down by 1.47%, Basic Materials down by 0.92%, FMCG down by 0.71% and PSU down by 0.63% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.22%, Tata Motors - DVR up by 2.11%, Yes Bank up by 1.95%, Tata Motors up by 1.69% and Reliance Industries up by 1.37%. On the flip side, Vedanta down by 6.70%, SBI down by 2.98%, Axis Bank down by 2.67%, Maruti Suzuki down by 1.31% and Indusind Bank down by 1.09% were the top losers.

Meanwhile, S&P Global Ratings in its latest report has said that most of its rated Indian firms and banks can survive the recent sharp fall in the rupee since their overseas borrowings either have dollar-linked earnings or are hedged. However, it noted that a deep and sustained decline in the currency could have broader economic effects on Indian corporates, including through knock-on effects of inflation and higher imported commodity costs squeezing margins. It pointed out that this would also result in an adverse impact on bank's asset quality, and may delay the recovery of Indian banks.

The US-based agency has stated that most emerging market issuers are buffered against further currency depreciation and do not face immediate downgrade risk from currency depreciation. It sees low risk from currency depreciation for companies in India, China and the rest of Southeast Asia and South Africa, while those in Argentina and Turkey are the most vulnerable to depreciation. It added that the rest of Latin America and Indonesia are in the medium-risk category.

According to the report, for many emerging market countries, the pace of currency depreciation has been less severe relative to the 'taper tantrum' and the global and Asian financial crises. It also said that factors like rising trade tensions, tightening of monetary policies in advanced economies, and the dollar's strength will continue to test emerging markets. It pointed out that interest-rate normalisation, combined with uncertainties around global trade and desynchronising global growth, is exacerbating pressures on emerging market currencies. Nevertheless, it said that the uneven movements across emerging markets show investors are discriminating based on economic fundamentals and policy frameworks.

The CNX Nifty traded in a range of 10,600.25 and 10,491.45. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 2.20%, Yes Bank up by 2.19%, TCS up by 2.07%, Sun Pharma up by 1.44% and Tata Motors up by 1.29%. On the flip side, Cipla down by 5.88%, SBI down by 3.29%, HPCL down by 2.94%, Axis Bank down by 2.61% and BPCL down by 2.23% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 13.42 points or 0.19% to 7,090.42, France’s CAC decreased 11.53 points or 0.23% to 5,089.86 and Germany’s DAX was down by 12.28 points or 0.11% to 11,482.68.

Asian markets ended mixed on Tuesday after a cautious session ahead of the US midterm elections and the Federal Reserve's monetary policy meet, scheduled to be held on November 7 and 8 respectively. Japanese shares ended higher following the mostly positive cues overnight from Wall Street and on a slightly weaker yen. Meanwhile, the markets in Malaysia and Singapore are closed for Deepavali.