Southward rally continues on Dalal street

Southward rally continued on Dalal Street on the last trading day of the week, with the Sensex and Nifty finishing in red for the third straight session. The markets made a positive start of the day, supported by the private report stating that the Reserve Bank’s move to extend the deadline for meeting the capital conservation buffer (CCB) norms by one year would help increase lending capacity of banks by over Rs 3.5 lakh crore. The additional amount will help provide much-needed fund for micro, small and medium enterprises (MSMEs) and non-banking financial companies (NBFCs) that are facing cash crunch. The street took note of a report that European Union has unveiled a 'strategy paper' outlining the broad roadmap for stepping up cooperation with India in a range of key sectors, including trade, investment, Defence and security, innovation, and on dealing with various global challenges. Meanwhile, India is keen to ink a trade agreement with Mauritius before Mauritian prime minister’s visit in January next year. Negotiations are under way at present and Mauritius wants duty cuts on its exports of textiles and marine products to India.

However, in the second half of the session, the indices erased all of their losses to dive in red terrain,  as Reserve Bank of India (RBI) has revealed that the top 20 defaulters of public sector banks account for Rs 2.36 lakh crore, or 20%, of total bad loans in India, though it is yet to reveal their names. The total bad loans in the Indian banking system are Rs 10.2 lakh crore as of March 31, 2018. Domestic sentiments also got hit with a private report that India could see two rate hikes in the initial monetary policies of next financial year. The market participants failed to get any sense of relief with a private report showing that India is now the second-fastest growing innovator after China among major Asian countries, with patent publication nearly doubling in a decade. In late noon deals, traders even overlooked Commerce and Industry Minister Suresh Prabhu’s statement that the government is preparing an integrated logistics plan to fast-track movement of goods and cut transactions cost of businesses.

On the global front, European markets were trading in red, as the UK budget deficit in October far exceeded expectations and was the biggest for the month in three years, raising the likelihood of the government missing its borrowing target for the fiscal year. The public sector net borrowing, or PSNB, excluding state banks was GBP 8.8 billion in October, which was the highest for the month since 2015. In September, the deficit was GBP 2.84 billion and the shortfall was GBP 7.23 billion in October 2017. Asian markets ended mixed, as a mixed bag of US data released overnight pointed to softening growth in the world's largest economy. In its latest Economic Outlook report, the Organization for Economic Co-operation and Development (OECD) has cut its global growth projection for next year to 3.5 percent from 3.7 percent predicted in May.

Back home, automobile sector stocks ended lower as Crisil Ratings in its latest report revised the passengers' vehicles (PV) volume growth forecast downward to 7-9 per cent, from its earlier estimate of 9-11 per cent for the financial year, owing to sluggish demand and higher inventory even during the festive season. The power stocks also declined despite the High-Level Empowered Committee (HLEC) suggesting pit-stop measures for stressed power units. The Committee has also suggested the Ministry of Coal and Ministry of Power work together to resolve the coal supply issue and enable availability of short-term linkage for a minimum stipulated period (say three months). Further, stocks of oil industry were in focused, amid reports that India’s crude oil import surged 10.5 per cent to 21 million tonnes (MT) in October 2018-a seven-year high - compared with 19 MT a year ago, in turn pulling up the country’s crude oil import dependency to 83.5 per cent.

Finally, the BSE Sensex plunged 218.78 points or 0.62% to 34937.98, while the CNX Nifty was down by 73.30 points or 0.69% to 10526.75.

The BSE Sensex touched a high and a low of 35364.50 and 34937.98, respectively and there were 5 stocks advancing against 26 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.74%, while Small cap index was down by 0.44%.

The lone gaining sectoral index on the BSE was Capital Goods up by 0.13%, while Metal down by 1.84%, Telecom down by 1.63%, Power down by 1.21%, Realty down by 1.20% and Basic Materials down by 1.19% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 1.73%, Larsen & Toubro up by 0.49%, ONGC up by 0.30%, TCS up by 0.19% and HDFC up by 0.09%. On the flip side, Mahindra & Mahindra down by 3.02%, Tata Steel down by 2.28%, Wipro down by 2.10%, Axis Bank down by 1.92% and Coal India down by 1.61% were the top losers.

Meanwhile, Secretary of Department of Telecommunications (DoT) Aruna Sundararajan has said that India will need to have fundamental rethink on satellite communication policy to fulfill growing connectivity demands which are being fuelled by mobile data growth, digital aspirations and advent of new-age technologies. She outlined the rapid growth of mobile data usage, driven by first-time users, and India's rising digital clout, and mentioned that there is no looking back for the country when it comes to strengthening its communications infrastructure.

Sundararajan has stated that in an era of 5G and Internet of Things (IOT), the demand for communication infrastructure far from slowing down, will increase exponentially. She said “we must have digital communications infrastructure that facilitates all this...We really must have a fundamental rethink on India's satcom policy in light of what are the emerging requirements and India's aspirations.” She pointed out that the demand for communication network is also being impelled by financial service industry, digital payment companies, smartphone usage and social media.

The DoT Secretary further said that a new telecom policy -- the National Digital Communications Policy (NDCP) 2018, aims to provide universal broadband connectivity at 50Mbps to every citizen by 2022, create four million additional jobs, and also talks of enhancing the sector’s contribution to the Gross Domestic Product (GDP) to 8 percent from 6 percent in 2017. She said “if we are to achieve robust modern digital communications infrastructure that the country needs...it has estimated the need for investment at $100 billion.” Stating that the country must embark on comprehensive review of its satellite communications policy, she stressed on the need to strike a balance between autonomy, security and the country's communications demand.

The CNX Nifty traded in a range of 10,646.25 and 10,512.00. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 4.23%, Adani Ports & SEZ up by 2.01%, Larsen & Toubro up by 0.52%, HDFC up by 0.35% and Infosys up by 0.28%. On the flip side, Mahindra & Mahindra down by 3.02%, Grasim Industries down by 2.52%, Hindalco down by 2.51%, Bajaj Finance down by 2.50% and IOC down by 2.37% were the top losers.

European markets were trading in red; UK’s FTSE 100 plunged 72.64 points or 1.04% to 6,977.59, France’s CAC fell 43.93 points or 0.89% to 4,931.57 and Germany’s DAX was down by 92.70 points or 0.83% to 11,151.47.

Asian markets ended mostly in green on Thursday with Wall Street regaining its footing overnight after a two-day slide. Chinese shares ended slightly lower as investors looked ahead to a crucial meeting between Chinese President Xi Jinping and his US counterpart Donald Trump at a G20 meeting in Argentina later this month. Meanwhile, Japanese shares advanced, with a relatively cheaper yen supporting underlying sentiments ahead of holidays in Japan and the US.