Post Session: Quick Review

Snapping a two-session losing run, Indian equity benchmarks ended Tuesday’s trade on an optimistic note with gains of around a percent. Increased buying during mid-session of trade largely helped the benchmarks to close the session near intraday high levels, with key gauges recapturing their crucial 35,100 (Sensex) and 10,550 (Nifty) bastions. Domestic indices made a cautious start and traded slightly in red with report that industrial output grew at the slowest pace in four months at 4.5% in September 2018, as the festival season started late this year compared to 2017. Growth faltered as the output of capital goods and mining expanded at a slower pace in September than in the previous month. Traders also remained cautions with SBI's report stating that the sharp decline in the headline inflation print to 3.31% for October a year-year-low will result in a prolonged pause in the rates, but raises a big question mark on the Reserve Bank’s inflation forecasting.

However, markets shed their early losses and took a turn towards the positive zone in second half of the day and traded with full traction, as market participants got some support with the consumer price index (CPI) inflation easing to 3.31 percent in the month of October 2018 as compared to 3.58 percent in October 2017 on low food prices. The retail inflation number is the lowest since September 2017 when it touched 3.28 percent. Also, the prices of vegetables fell by 8.06 percent in the month of October in comparison to a 4.15 percent contraction in September. Some solace also came with a report stating that India is pushing for liberalising norms to promote services trade with 15 other countries including China as part of a mega free trade agreement as it looks for a balanced pact with these nations.  Also, markets received some support from strengthening of rupee against the dollar.

On the global front, Asian markets ended mostly lower on Tuesday, after a tech-led sell off overnight on Wall Street amid indications of weak demand for Apple's iPhones. Worries about global economic growth and trade wars also dampened sentiment. European markets were trading in green. Back home, the aviation stocks ended higher as India’s domestic air passenger traffic grew in double digits for the 49th consecutive month in September. India’s domestic revenue passenger kilometres (RPK) in the month under review rose by 19.8 percent compared to the corresponding month of the previous year. Agriculture stocks were in focus with report that India has emerged as a major seed hub in Asia as 18 companies out of 24 leading firms evaluated, have invested in breeding and production activities in the country.

The BSE Sensex ended at 35149.81, up by 336.82 points or 0.97% after trading in a range of 34672.20 and 35187.75. There were 26 stocks advancing against 5 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.36%, while Small cap index was up by 0.16%. (Provisional)

The top gaining sectoral indices on the BSE were Energy up by 1.86%, Oil & Gas up by 1.78%, Capital Goods up by 1.31%, Bankex up by 1.05% and Auto up by 0.93%, while Healthcare down by 0.75%, Realty down by 0.59% and Telecom down by 0.07% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were ICICI Bank up by 2.40%, NTPC up by 2.29%, Axis Bank up by 2.28%, Reliance Industries up by 2.01% and Larsen & Toubro up by 1.92%. (Provisional)

On the flip side, Sun Pharma down by 4.56%, Tata Motors down by 3.41%, Tata Motors - DVR down by 2.39%, Power Grid down by 0.99% and Indusind Bank down by 0.45% were the top losers. (Provisional)

Meanwhile, SBI Research in its latest report has showed that the sharp decline in the headline inflation print to 3.31 percent for October--a year-year-low-- will result in a prolonged pause in the rates, however raises a ‘big question mark’ on the Reserve Bank's inflation forecasting.  It underlined “We now believe a prolonged pause by the Reserve Bank till the first quarter of FY20. But most importantly, there has to be a serious rethink by the RBI on inflation forecasting”.

The report further pointed out that the latest inflation print indicates the ‘uncertainty’ about the inflation forecasting done by the six-member Monetary Policy Committee, which sets the interest rates. The report called upon the MPC to work with short-term forecasts for the next three-six months as macro-variables like oil prices are now almost difficult to predict. It pointed out that the oil price crash in FY15 had resulted in inflation undershooting RBI projection by more than 3 percentage points in December 2014.

Besides, the report said that the RBI, which has been mandated to keep the inflation at 4 percent with a 2 percentage points change either way, had pegged inflation to come at 4.4 percent by December. Moreover, it stated that the slower headline inflation also suggests that there is little food procurement happening on the ground and called it as a matter of serious concern, and adding that if oil prices continue to slide, headline inflation can also come below 3 percent in the next two months.

The CNX Nifty ended at 10582.25, up by 100.05 points or 0.95% after trading in a range of 10440.55 and 10596.25. There were 41 stocks advancing against 9 stocks declining on the index. (Provisional)

The top gainers on Nifty were Eicher Motors up by 6.27%, Indian Oil up by 4.78%, BPCL up by 4.24%, HPCL up by 3.22% and Ultratech Cement up by 2.41%. (Provisional)

On the flip side, Sun Pharma down by 4.55%, Tata Motors down by 3.63%, Indiabulls Housing Finance down by 2.74%, Power Grid down by 1.08% and Cipla down by 0.71% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 20.20 points or 0.29% to 7,073.28, France’s CAC was up by 15.86 points or 0.31% to 5,074.95 and Germany’s DAX rose 63.59 points or 0.56% to 11,389.03.

Asian markets ended mostly lower on Tuesday, although Chinese stocks rose notably after reports that China and the United States have resumed high levels talks to reduce tensions ahead of Trump-Xi meeting later this month. Chinese Premier Li Keqiang said the country needs reforms and adjustments in policies to lift growth. Japanese shares ended lower, dragged down by technology stocks after one of Apple's suppliers, Lumentum Holdings slashed its fiscal outlook for the current quarter.