Benchmarks extend winning streak for third straight session

Extending winning streak for third straight day, Indian equity benchmarks ended the Monday’s trade on optimistic note with frontline gauges recapturing their crucial 35,700 (Sensex) and 10,750 (Nifty) levels. After a positive opening, there appeared not even an iota of profit booking in the session with benchmarks fervently gaining from strength to strength to end near intraday highs, as investors continued hunt for fundamentally strong stocks. Sentiments remained up-beat with former Niti Aayog Vice Chairman Arvind Panagariya’s statement that the government has made a huge progress in implementing reforms including some difficult structural ones such as the Goods and Services Tax (GST) and Insolvency and Bankruptcy Code (IBC) that previous governments had difficulty in introducing. He also said that the Centre should stick to the fiscal deficit target for 2018-19. Investors took note of report stating that the government may push the Reserve Bank of India (RBI) to allow more active participation by government nominees to the central board in the decision-making process and keep them informed about key regulatory issues. Meanwhile, the government expects to garner at least Rs 50 billion through share buyback offers of state-run companies, including Coal India, in the current financial year.

Buying in last leg of trade helped markets to end near intraday high levels as optimism remained among traders with a private report stating that corporate India reported a good set of numbers during the July-September 2018 quarter, thanks to gains from a low base during the corresponding quarter last fiscal year and a better-than-expected showing by metals and mining firms. Market participants remained optimistic on Commerce and Industry Minister Suresh Prabhu’s statement that the development of industrial park rating system would help increase competitiveness of industries and promotion of the manufacturing sector. The system is being developed by the ministry to assess industrial parks in the country based on four pillars internal and external infrastructure, connectivity, environment and safety management, and business support services.

On the global front, European markets are trading mostly in green in early deals despite lingering uncertainty surrounding the U.K.’s future relationship with the European Union. Asian markets ended mostly higher on Monday, but investors were keeping a close eye on the China-US trade row after Donald Trump's optimistic comments on a possible deal were offset by a war of words between his vice president and Xi Jinping.

Back home, textiles and apparel sector’s stocks remained in action on report that textiles and apparel exports jumped by a staggering 33% in October on account of higher overseas demand. The country's textile and apparel exports stood at Rs 1,986 billion for October 2018 as against Rs 1,489 billion in the corresponding month last year. Stocks related to Renewable Energy space remained in limelight as Indian Renewable Energy Development Agency (IREDA) said the government is planning incentives to promote renewable power and it has already issued tenders for setting up 26-GW clean energy capacities. IREDA Chairman K S Popli said India is planning to produce 50 GW (from clean energy sources) in the next few years.

Finally, the BSE Sensex gained 317.72 points or 0.90% to 35,774.88, while the CNX Nifty was up by 81.20 points or 0.76% to 10,763.40.

The BSE Sensex touched a high and a low of 35,818.83 and 35,511.10, respectively and there were 24 stocks advancing against 7 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.35%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Realty up by 1.45%, FMCG up by 1.27%, Metal up by 1.16%, Energy up by 1.16% and Auto was up by 1.05%, while PSU down by 0.23% and Oil & Gas down by 0.21% were the only losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 7.19%, ITC up by 2.77%, Tata Motors up by 2.73%, Tata Motors - DVR up by 2.63% and Indusind Bank up by 2.60%. On the flip side, ONGC down by 1.37%, ICICI Bank down by 1.33%, SBI down by 0.72%, NTPC down by 0.65% and Asian Paints down by 0.65% were the top losers.

Meanwhile, the share of foreign portfolio investments (FPI) through participatory notes (P-notes) in domestic capital markets has declined to nine-and-a-half year low of Rs 66,587 crore at the end of October. According to SEBI data, total value of P-Notes investments in Indian markets including equity, debt and derivatives, at October end fall to Rs 66,587 crore from Rs 79,548 crore in the end of September and Rs 84,647 crore in August.

Of the total, P-note holdings in equities at October-end were at Rs 50,584 crore, while in debts and derivatives were at Rs 14,563 crore and Rs 1,441 crore respectively. The quantum of foreign portfolio investors’ (FPIs) investments via P-notes dropped to 2.2 percent during the period under review from 2.4 percent in the preceding month. P-notes are issued by registered FPIs to overseas investors who wish to be part of the Indian stock markets without registering themselves directly. They, however, need to go through a proper due diligence process.

SEBI, in July 2017, had notified stricter norms stipulating a fee of $1,000 on each instrument to check any misuse for channelising black money. It also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those which are used for hedging purposes. Meanwhile, in September this year, the market regulator issued revised KYC norms for FPIs, wherein resident as well as non-resident Indians have been permitted to hold non-controlling stake in such entities. These norms were put in place weeks after a panel suggested various changes to the guidelines proposed earlier, amid concerns in certain quarters that overseas funds might face difficulties in ensuring compliance.

The CNX Nifty traded in a range of 10,774.70 and 10,688.80. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 7.83%, ITC up by 2.87%, Tata Motors up by 2.72%, Indusind Bank up by 2.40% and Vedanta up by 2.27%. On the flip side, Indiabulls Housing Finance down by 3.42%, GAIL India down by 2.19%, Bajaj Finance down by 1.46%, ICICI Bank down by 1.10% and SBI down by 0.98% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose 18.10 points or 0.26% to 7,031.98, France’s CAC increased 12.11 points or 0.24% to 5,037.31 and Germany’s DAX was up by 5.09 points or 0.04% to 11,346.09.

Asian markets ended mostly higher on Monday, despite remarks from US Vice President Mike Spence at the Asia Pacific Economic Co-operation summit on Saturday which added to anxiety over the Sino-US trade spat. Pence said the US would not back down from its trade dispute until China changes its ways. The stark warning dampened investor hopes for a thaw in the Sino-US dispute on the eve of the G20 summit later this month in Argentina. Comments from two US Federal Reserve officials cautioning about global economic growth and a CIA report concluding that Saudi Arabia's powerful Crown Prince Mohammed bin Salman was behind the killing of journalist Jamal Khashoggi also kept investors nervous. However, Chinese shares ended higher, helped by gains in financials and property developers. While, Japanese shares rebounded from last week's selloff, with chip-related stocks outperforming.