Markets bounce back after 3-day fall

The equity benchmarks bounced back on Monday to close on positive note, after falling for last three trading sessions. The Bourses begun the week well, buoyed by the Organization for Economic Cooperation and Development’s (OECD) statement that India’s economy will grow close to 7.5% in 2019 and 2020. India’s gross domestic product (GDP) grew 6.7% in 2017-18. However, the trade soon turned volatile, amid India Ratings (Ind-Ra) latest report that a change of even $1 per barrel would impact India’s import bill by Rs 6,160 crore, as the country continues to be a large importer of crude oil. India meets over 80% of its oil demand through imports. Adding some anxiety among traders, National Green Tribunal chairman Justice Adarsh Kumar Goel stated that India has earned its pride of place in the world with its economy growing very fast but a large number of people still live below the poverty line. The country had no doubt achieved growth but it was not enough to meet the aspirations of the freedom fighters who had drafted the Constitution. Meanwhile, West Bengal Finance Minister Amit Mitra said that demonetisation and faulty implementation of the GST have caused a loss of Rs 4.75 lakh crore to the country's economy.

But, in the second half of the session, the markets gained traction to settle near their day’s high points, following firm global markets. Domestic sentiments got boost with the report stating that foreign investors have pumped in Rs 6,310 crore into Indian capital markets this month so far, after pulling out massive funds in October, on easing crude oil prices and a strengthening rupee. Some comfort also came with a private report indicating that the Reserve Bank of India (RBI) is expected to keep the key policy rates unchanged at its ensuing policy review meet next month, amid easing global crude oil prices and robust agriculture production. Investors were seen taking support with the RBI’s report that the country’s foreign exchange reserves rose by $568.9 million to $393.580 billion in the week to November 16, mainly due to a spurt in foreign currency assets. Adding some relief, SBI Research report stated that following decline in oil prices, the country’s current account deficit (CAD) is expected to touch 2.6% of GDP in the current fiscal against an earlier expectation of 2.8%. Besides, the market participants took note of Economic Affairs Secretary Subhash Chandra Garg’s statement that the RBI should provide more liquidity to non-banking finance companies (NBFCs) in a bid to boost lending.

On the global front, European markets were trading in green, after EU leaders backed UK Prime Minister Theresa May's Brexit withdrawal agreement despite last-minute concerns from Spain. Adding some optimism, France's manufacturing confidence has increase in November after easing in the previous two months. The figures from the statistical office INSEE showed that the manufacturing confidence index rose to 105 from 104 in October. Meanwhile, France's private sector growth slowed less-than-expected in November at the slowest pace in two months. As per survey data from IHS Markit, the composite Purchasing Managers' Index, or PMI, which combines manufacturing and services, fell to 54 from 54.1 in October. The street had expected a reading of 53.9. Asian markets ended higher, amid bets that US President Donald Trump and his Chinese counterpart Xi Jinping will find a solution to the trade dispute at the Group of 20 summit in Buenos Aires this week.

On the sectoral front, banking stocks ended higher, as bank credit rose 14.88% to Rs 91.11 lakh crore in the fortnight ended November 9, while deposits grew by 9.13% to Rs 118.25 lakh crore. However, metal stocks remained under pressure, after World Steel Association (worldsteel) reported that India registered a marginal growth in its crude steel output at 8.77 million tonne (MT) during October 2018 as against 8.73 MT produced during the same month a year ago. Further, realty stocks also remained in focused with Care Ratings’ latest report stating that India's infrastructural landscape is changing quickly. Over the last four years, the Narendra Modi-led government has focused heavily on infrastructural development, with the total number of projects rising 87%. At present, 1,361 projects are being implemented in the country. Besides, stocks related to coal industry remained in limelight, amid reports that the Geological Survey of India (GSI) has found 44 new coal blocks in four states of Eastern India. Besides, Gems and jewellery shined with Commerce and Industry Minister Suresh Prabhu’s statement that he has taken up with the finance ministry the issue concerning credit to the gems and jewellery sector to ensure adequate availability of funds for them.

Finally, the BSE Sensex surged 373.06 points or 1.07% to 35,354.08, while the CNX Nifty was up by 101.85 points or 0.97% to 10,628.60.

The BSE Sensex touched a high and a low of 35,397.24 and 34,896.07, respectively and there were 21 stocks advancing against 10 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index rose 0.06%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were FMCG up by 2.20%, Bankex up by 1.27%, Auto up by 1.10%, Telecom up by 0.98% and TECK up by 0.98%, while Metal down by 1.33%, Healthcare down by 0.87%, Basic Materials down by 0.61%, PSU down by 0.24% and Oil & Gas down by 0.22% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 5.02%, Hindustan Unilever up by 4.21%, Wipro up by 3.76%, Asian Paints up by 2.72% and Axis Bank up by 2.69%. On the flip side, Yes Bank down by 3.89%, ONGC down by 3.58%, Sun Pharma down by 2.88%, Vedanta down by 1.90% and Coal India down by 1.85% were the top losers.

Meanwhile, in order to meet the fiscal deficit target, Finance Minister Arun Jaitley has said that the government does not need any extra funds from the Reserve Bank of India (RBI) or any other institution. However, he said that extra funds, which may accrue from the new capital framework of the RBI, can always be used for poverty alleviation programmes over the years by future governments. Besides, India’s fiscal deficit is slated to come down to 3.3% of Gross Domestic Product (GDP) at the end of the current fiscal.

Over the criticism that the government was eyeing RBI’s reserves, Jaitley said globally central banks have a capital framework which determines the amount of funds that ought to be maintained as reserves. He said “All we are saying is there has to be some discussion and some norms under which Reserve Bank will have a capital framework.”

Regarding to the autonomy of the RBI, Finance Minister said it has to be exercised within the framework of law. He said “The government’s viewpoint is that we respect and we will always maintain the autonomy within the framework of the laws which have been laid down”. He added that the government would continue to flag issues with the RBI in the larger interest of the economy, and there has to be coordination between the central bank and the government and he said “If there are sectors of economy which are starved of liquidity or credit, as a sovereign government… we certainly will flag those issues wherever the RBI has the authority to decide certain things”.

The CNX Nifty traded in a range of 10,637.80 and 10,489.75. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 6.11%, Wipro up by 4.04%, Hindustan Unilever up by 3.87%, Axis Bank up by 2.90% and Asian Paints up by 2.67%. On the flip side, ONGC down by 3.45%, Sun Pharma down by 2.83%, Yes Bank down by 1.97%, Vedanta down by 1.93% and Coal India down by 1.79% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 79.71 points or 1.13% to 7,032.57, France’s CAC jumped 67.50 points or 1.35% to 5,014.45 and Germany’s DAX was up by 132.42 points or 1.17% to 11,325.11.

Asian markets ended mostly in green on Monday following Friday’s US selloff and another plunge for oil. Investors kept a close watch on the developments on the US-China trade front ahead of the upcoming G20 summit in Buenos Aires, Argentina, at the end of the week. Traders also looked ahead to remarks by Federal Reserve Chairman Jerome Powell and the minutes of the Fed's latest monetary policy meeting later this week for clues on US monetary policy. Japanese shares ended higher as traders returned to their desks after a long holiday weekend. However, Chinese shares ended slightly lower as investors braced for crucial talks between the US and China at the G20 summit in Argentina this week.