Post Session: Quick Review

Paring all of their initial losses, Indian equity benchmarks managed to end the session in green terrain, as defeat of the ruling party in three states was not as poor as expected, but anxiety about the central bank governor's resignation kept the investors on edge. Markets started the session with a huge gap on downside as sentiments remain dampened with the Reserve Bank of India (RBI) governor Urjit Patel’s unexpected resignation from his post on Monday. The government and the RBI have been fighting for weeks over how much autonomy the RBI should have as the administration of Prime Minister Narendra Modi seeks to reduce curbs on lending and to gain access to the RBI’s surplus reserves. Traders also remain concerned about Moody’s Investors Service’s statement that the independence of a country’s central bank is an important consideration while assessing a country’s institutional strength and any attempt by the government to curtail it would be credit negative. To a query on the sovereign rating impact of the developments around RBI, Moody’s said while the motivation for the RBI Governor’s resignation is unclear, the independence of a country’s central bank is an important consideration in their assessment of a sovereign’s institutional strength.

However, markets made sharp recovery and entered into green to end near intraday high levels, as traders took some support with Commerce and Industry Minister Suresh Prabhu’s statement that the New Industrial Policy, which will replace the 27-year-old existing policy, has been sent for the Union Cabinet’s consideration. The new industrial policy aims to resolve bottlenecks arising from inadequate infrastructure, restrictive labour laws and complicated business environment. Traders took note of Former chief economic adviser Arvind Subramanian’s statement that the inclusion of petrol and diesel in the Goods and Services Tax (GST) ambit is not possible until the revenues under the new tax regime stabilize.

Firm opening in European markets too aided sentiments as Germany's merchandise exports grew more-than-expected in October and at the fastest pace in five months. The preliminary figures from Destatis showed that exports increased a calendar ad seasonally adjusted 0.7 percent from September, when they declined 0.4 percent. Asian markets ended mixed, with investors cheering reports that Chinese Vice Premier Liu, US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer have discussed trade issues despite a diplomatic row over the arrest of a senior Chinese businesswoman.

Back home, airline industry stocks reeling under pressure after rating agency ICRA assigned a negative outlook to the domestic airline industry even as it expects the passenger traffic growth to remain healthy at about 15-16% in the medium-term. Gems and jewellery related stocks lost sheen despite the Gems and Jewellery Export Promotion Council’s (GJEPC) report that the gems and jewellery exports are likely to grow by up to 5% this financial year, mainly aided by improving demand in the US market during the upcoming Christmas season. Stocks related to tourism industry were trading mixed, despite reports that the Government of India and the Asian Development Bank (ADB) signed in New Delhi a Loan Agreement for $31 million to build-up the State Tourism Industry and boost visitor arrivals.

The BSE Sensex is currently trading at 35150.01, up by 190.29 points or 0.54% after trading in a range of 34426.29 and 35207.33. There were 20 stocks advancing against 10 stocks declining on the index. (Provisional)

The broader indices were trading in green; the BSE Mid cap index surged 1.54%, while Small cap index was up by 1.54%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.60%, Healthcare up by 1.93%, Consumer Discretionary Goods & Services up by 1.70%, FMCG up by 1.41% and Basic Materials was up by 1.23%, while Oil & Gas down by 0.21% was the lone losing index on BSE. (Provisional)

The top gainers on the Sensex were Yes Bank up by 7.29%, Sun Pharma up by 5.75%, Asian Paints up by 4.03%, SBI up by 2.85% and Axis Bank up by 2.42%. On the flip side, Hero MotoCorp down by 1.58%, Bharti Airtel down by 1.43%, HDFC Bank down by 1.36%, ICICI Bank down by 1.04% and Adani Ports & SEZ down by 0.99% were the top losers. (Provisional)

Meanwhile, rating agency ICRA has assigned a negative outlook to the domestic airline industry. However, rating agency is expecting that the domestic passenger traffic growth will remain healthy at around 15-16 per cent over the medium term, supported by low penetration levels, favourable macro environment, regulatory push towards regional connectivity and development of new airports.

ICRA stated that while the passenger traffic growth remained strong during the previous fiscal and the first half of the current fiscal, the industry faced a double whammy with increasing jet fuel cost and rupee depreciation. It added the cost pressures are expected to continue in the balance part of FY19, resulting in further weakening of the financial health of the industry.

Besides, it underlined that rise in aviation fuel price and rupee depreciation has squeezed revenue and cost per available seat kilometre (RASK-CASK), exerting significant pressure on operating profitability of airlines. This will result in significantly higher losses (at net level) in the fiscal 2018-19 as compared to the previous fiscal. Moreover, it added that the airline industry maintains strong capacity addition plans, as reflected in the large order book of the domestic airlines.

The CNX Nifty is currently trading at 10549.15, up by 60.70 points or 0.58% after trading in a range of 10333.85 and 10567.15. There were 35 stocks advancing against 15 stocks declining on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 7.36%, Sun Pharma up by 5.84%, Asian Paints up by 3.88%, Titan Co up by 2.87% and Zee Entertainment up by 2.74%. On the flip side, HPCL down by 2.91%, Indian Oil Corporation down by 1.79%, Bharti Airtel down by 1.59%, HDFC Bank down by 1.40% and BPCL down by 1.06% were the top losers. (Provisional)

All European markets were trading in green; UK’s FTSE 100 gained 63.56 points or 0.95% to 6,785.10, France’s CAC soared 69.48 points or 1.47% to 4,811.86 and Germany’s DAX was up by 146.84 points or 1.38% to 10,768.91.

Asian markets ended on a mixed note on Tuesday after US shares recovered from sharp losses to close higher overnight. A cautious undertone prevailed as US-China trade tensions simmered, oil held its biggest loss in two weeks and UK Prime Minister Theresa May postponed a Parliamentary vote on Brexit deal. Chinese shares ended higher in very thin trade as Beijing confirmed that it is still in trade talks with Washington, and as investors looked to market support from government policies aimed at countering slowing growth. Investors awaited industrial output and retail sales figures for November, due on Friday. Meanwhile, Japanese shares fell modestly to close near their lowest level since March, dragged down by financials and cyclical stocks.