Benchmarks continue to trade in fine fettle in early noon session

Key Indian benchmarks continued to trade in fine fettle in early noon session due to sustained buying by market participants. Broader indices, BSE Mid cap and Small cap were also showing positive trend. Traders took encouragement on report that India and China decided to set up a ministerial-level mechanism to resolve issues relating to trade, investment and services as Prime Minister Narendra Modi and Chinese President Xi Jinping vowed to further broadbase bilateral ties during their two-day informal summit. On the sectoral front, oil & gas companies’ shares were trading higher as Oil Minister Dharmendra Pradhan has said India is investing over $60 billion in developing natural gas supply and distribution infrastructure. Natural gas currently constitutes 6.2 percent of all energy consumption in the country. Traders were taking note of report that the country's foreign exchange reserves surged by $4.24 billion to touch a record high of $437.83 billion in the week to October 4. Meanwhile, Finance Minister Nirmala Sitharaman will hold a review meeting with CEOs of public sector banks (PSBs) to discuss various issues, including progress on credit offtake, as part of efforts to prop up the economy.

Global cues too remained supportive with all the Asian market were trading in green at this point as sentiments improved following last week's high-level trade negotiations between the US and China. Back home, insurance stocks remained in focus with report that life insurance companies saw a 35.1 percent year-on-year growth in new premium collections, to Rs 1.26 lakh crore in the April to September (H1FY20) period.

The BSE Sensex is currently trading at 38332.84, up by 205.76 points or 0.54% after trading in a range of 38066.13 and 38383.64. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.82%, while Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Realty up by 3.27%, Metal up by 1.74%, Oil & Gas up by 1.36%, Basic Materials up by 1.32% and PSU was up by 1.09%, while IT down by 0.45%, TECK down by 0.26% and Utilities was down by 0.06% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 5.32%, Tata Motors - DVR up by 5.11%, ONGC up by 3.52%, Tata Steel up by 2.90% and Vedanta up by 2.59%. On the flip side, Infosys down by 3.14%, Bajaj Finance down by 1.22%, Power Grid Corporation down by 0.80%, Yes Bank down by 0.76% and NTPC down by 0.09% were the top losers.

Meanwhile, reinforcing fears of a slowing economy, India's factory output growth, measured by the Index of Industrial Production (IIP), contracted by 1.1% in August, recording the poorest performance in seven years due to a sharp decline in production of capital goods and consumer durable. The IIP had shown a growth of 4.8% in August 2018. The previous low in IIP was (-) 1.7% in November 2012. As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of August stood at 126.6, which was 1.1% lower as compared to the level in the month of August 2018. The cumulative growth for the period April-August 2019 stood at 2.4% over 5.3% in the corresponding period of the previous year.

On the sectroal front, the manufacturing sector, which contributes over 77% to the IIP, showed a decline of 1.2% in output during August 2019 as against a growth of 5.2% in the same month of last year.  The previous low in the manufacturing segment was recorded at (-) 1.8% in October 2014. The data also revealed that electricity generation growth too was in negative at (-) 0.9% as against an expansion of 7.6% in the year-ago month, while the mining sector growth was flat at 0.1%. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of August 2019 stand at 92.1, 129.0 and 165.7 respectively. The cumulative growth in these three sectors during April-August 2019 over the corresponding period of 2018 has been 2.8%, 2.1% and 5.0%, respectively.

The capital goods segment, a crucial sector that signifies investment, contracted 21%. Contraction was 7% in the previous month. Production in the category remained in the red for the seventh straight month. As per Use-based classification, the growth rates in August 2019 over August 2018 are 1.1% in Primary goods, 7.0% in Intermediate goods and (-) 4.5% in Infrastructure/ Construction Goods. The Consumer durables and Consumer non-durables have recorded growth of (-) 9.1% and 4.1%, respectively.

In terms of industries, 15 out of the 23 industry groups in the manufacturing sector have shown negative growth during the month of August 2019 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of motor vehicles, trailers and semi-trailers’ has shown the highest negative growth of (-) 23.1% followed by (-) 21.7% in ‘Manufacture of machinery and equipment n.e.c.’ and (-) 18.0% in ‘Other manufacturing’. On the other hand, the industry group ‘Manufacture of basic metals’ has shown the highest positive growth of 11.8% followed by 11.3% in ‘Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’ and 10.3% in ‘Manufacture of wearing apparel’.

The CNX Nifty is currently trading at 11363.45, up by 58.40 points or 0.52% after trading in a range of 11290.05 and 11382.50. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 5.19%, ONGC up by 3.57%, Tata Steel up by 2.67%, JSW Steel up by 2.58% and Vedanta up by 2.48%. On the flip side, Infosys down by 3.17%, Cipla down by 1.33%, Bajaj Finance down by 0.99%, GAIL India down by 0.80% and UPL down by 0.78% were the top losers.

All Asian market were trading in green; Hang Seng increased 235.37 points or 0.89% to 26,543.81, Shanghai Composite gained 34.99 points or 1.18% to 3,008.65, Jakarta Composite soared 17.10 points or 0.28% to 6,122.90, Straits Times advanced 11.45 points or 0.37% to 3,125.42, KOSPI rose 23.01 points or 1.13% to 2,067.62 and Taiwan Weighted was up by 176.99 points or 1.63% to 11,066.95.