Key indices log strong gains ahead of F&O expiry

Indian equity bourses logged strong gains on Wednesday to continue northward rally for straight third session, on the back of covering-up of pending short positions ahead of November F&O expiry on Thursday. The markets made a cheerful start, taking support with a report that the Reserve Bank of India (RBI) Governor Urjit Patel told law makers that the note ban’s impact was transient and the economy is robust. He said the economy would get a boost from oil prices cooling off from four-year highs and asserted that the fundamentals were robust. Adding enthusiasm among the traders, banks credit flow to commercial sector has gone up by 15.6% on year-on-year basis, registering highest growth since demonetisation. According to the fortnightly data released by the RBI, the adjusted non-food bank credit stood at Rs 97.32 lakh crore as on November 9, 2018 as compared to Rs 84.22 lakh crore reported in the year-ago fortnight.

The trade remained positive throughout the session, following positive global markets. Investors reacted positively to the Commerce and Industry Minister Suresh Prabhu’s statement that he has taken up the issue of declining credit to exporters with the finance ministry to ensure adequate availability of funds to them. The street got comfort with a private report stating that Indian analytics, data science and big data industry is estimated to be $2.71 billion in revenues and growing at a healthy rate of 33.5% CAGR.  Some relief also came with Finance Minister Arun Jaitley stating that as many as 3 lakh poor people have benefited from Ayushman Bharat health scheme in the last one-and-a-half months. Meanwhile, the RBI has decided to inject a higher amount of Rs 40,000 crore through purchase of government securities under open market operations (OMOs) in December 2018.

On the global front, European markets were trading in green, as UK retail sales growth in November was greater than expected, though retailers are gloomy about activity in the next three months. The survey by the Confederation of British Industry showed that the monthly retail sales balance of the Distributive Trades survey rose to +9 from +5 in October. The street overlooked reports that France's consumer confidence dropped in November to its lowest level since early 2015. As per survey data from the statistical office INSEE, the consumer confidence index fell to 92 from 95 in October. Asian markets ended higher, on hopes for a positive outcome from Donald Trump's high-stakes trade talks with Xi Jinping, while dovish comments from the Federal Reserve's number-two suggested the bank could slow its pace of interest rate hikes.

Back home, telecom sector stocks remained under pressure, despite reports that regulator Trai will meet top officials of telecom companies on November 28 to discuss the major issues that should be taken up for deliberation during 2019. Power sector stocks also fell, amid report that stressing on tough steps to reform power sector, Niti Aayog CEO Amitabh Kant pitched for ban on use of fossil fuel based gensets saying that the government needs to do it before a court order six months down the line. Further, stocks related to minerals and mining industry remained in limelight, amid reports that the Geological Survey of India (GSI) is going to use ultra-modern remote-sensing technology developed by the National Aeronautics and Space Administration (NASA) for the first time in India to map surface mineralogy.

Finally, the BSE Sensex surged 203.81 points or 0.57% to 35,716.95, while the CNX Nifty was up by 43.25 points or 0.40% to 10,728.85.

The BSE Sensex touched a high and a low of 35,822.16 and 35,605.34, respectively and there were 12 stocks advancing against 19 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.50%, while Small cap index was down by 0.48%.

The top gaining sectoral indices on the BSE were IT up by 3.58%, TECK up by 2.88%, Consumer Durables up by 0.52%, and Energy up by 0.32%, while Telecom down by 2.87%, PSU down by 2.04%, Realty down by 1.91%, Oil & Gas down by 1.57% and Capital Goods down by 1.26% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 4.67%, Infosys up by 4.61%, Indusind Bank up by 1.96%, Reliance Industries up by 1.66% and ICICI Bank up by 1.33%. On the flip side, Yes Bank down by 11.71%, Bharti Airtel down by 3.81%, Tata Motors down by 3.14%, Tata Motors - DVR down by 2.70% and ONGC down by 2.49% were the top losers.

Meanwhile, with an aim to explore logistics partnerships with India, the Federation of Indian Export Organisations (FIEO) has said that it will organize a mega logistics meet from January 31, 2019-February 2, 2019. Mega logistics meet will improve logistics cost effectiveness and operational efficiencies for India’s global trade.

It is expected that over 20 countries including Afghanistan, Iran and Iraq to participate in a mega logistics meet early next year. The meet will focus on investment opportunities in infrastructure development, warehouse consolidation, technology integration and IT enablement and skilling of manpower.

Besides, the cost of logistics in India is a high 14 per cent, whereas in developed economies, its nearer 8 per cent. India ranked 44 in the World Bank’s Logistics Performance Index 2018. According to the Economic Survey 2017-18, India’s logistics industry is worth around $160 billion and is likely to touch $215 billion in the next two years.

The CNX Nifty traded in a range of 10,757.80 and 10,699.85. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were TCS up by 5.02%, Infosys up by 4.01%, Zee Entertainment up by 3.97%, Reliance Industries up by 2.06% and IndusInd Bank up by 1.91%. On the flip side, Yes Bank down by 11.31%, BPCL down by 4.56%, Bharti Airtel down by 3.70%, Indian Oil Corporation down by 3.21% and Hindustan Petroleum down by 3.05% were the top losers.

European markets were trading mostly in green; CAC 40 gained 13.62 points or 0.27% to 4,996.77 and DAX rose 8.18 points or 0.07% to 11,317.29, while FTSE 100 was down by 1.36 points or 0.02% to 7,015.49.

Asian markets closed mostly higher on Wednesday after comments from White House economic advisor Larry Kudlow gave rise to new hopes for a de-escalation of the US-China trade dispute. President Donald Trump remains open to a deal with China and the upcoming G20 summit offers ‘an opportunity to break through what have been disappointing discussions’ in recent months, Kudlow told on Tuesday. Traders also looked ahead to a speech by Fed Chairman Jerome Powell later in the day and the minutes from the Fed's November 7-8 meeting due on Thursday for additional clues on the interest rate outlook. On Tuesday, Federal Reserve Vice Chair Richard Clarida reaffirmed the need for further rate hikes, but cautioned the tightening path would be data dependant. Chinese shares ended up as investors held out hopes for a de-escalation of Sino-US trade tensions. Further, Japanese shares rose sharply to extend gains for a fourth consecutive session, as investors tracking an advance in Wall Street overnight and a cheaper yen.