Local bourses add gains in early noon session

Indian equity benchmarks continued to add gains in early noon session. Traders were seen piling positions in Metal, Auto, and Energy stocks. Traders took encouragement with the strong trade in Indian rupee which gained in the early trade on Tuesday, it opened higher by 14 paise at 70.74 per dollar versus Friday's close 70.88. Broader indices, BSE Mid cap and Small cap are also showing positive trends. Traders took note of report that the commerce ministry is working on a proposal to allow domestic companies to make payments in the rupee currency for services obtained from special economic zone units. The proposal is aimed at promoting the growth of IT units in special economic zones (SEZs). The up-move also got support with the Reserve Bank’s statement that continuing its northward surge, India’s forex kitty has swelled by $1.039 billion to a new life-time high of $440.751 billion for the week ended October 18. Besides, traders remained optimistic with Union Steel Minister Dharmendra Pradhan said that India will spend about $1.4 trillion on its infrastructure development in the next five years.

On the global front, Asian markets were trading mixed on Tuesday, amid hopes for an easing in US-China trade tensions. Back home, power sector remained in focus with the report that the government is in the final leg of drafting the new subsidy scheme that will allow stressed gas-based power projects to run their plants using a mix of domestic and imported gas. Steel stocks remained buzzing with Minister of Petroleum and Natural Gas & Steel Dharmendra Pradhan has said that it is expected to increase further in the future as India embarks on becoming a $5 trillion economy by 2024.

The BSE Sensex is currently trading at 39709.78, up by 459.58 points or 1.17% after trading in a range of 39254.12 and 39714.73. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.67%, while Small cap index was up by 0.52%.

The top gaining sectoral indices on the BSE were Metal up by 3.76%, Auto up by 3.01%, Energy up by 1.88%, Industrials up by 1.52% and Oil & Gas was up by 1.46%, while Telecom was down by 3.59% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 13.89%, Tata Motors up by 12.50%, Tata Steel up by 6.53%, Yes Bank up by 4.93% and Vedanta up by 4.60%. On the flip side, Bharti Airtel down by 3.39%, Power Grid Corporation down by 0.74%, Hindustan Unilever down by 0.55%, Kotak Mahindra Bank down by 0.54% and HDFC down by 0.22% were the top losers.

Meanwhile, expressing optimism over automobile retail sales, India Ratings and Research (Ind-Ra) in its latest report has said that retail sales of automobile are likely to pick up with an improvement in consumer sentiment during the ongoing festive season due to recent liquidity easing measures announced by the government and on back of favourable monsoons. It said consequently, inventory build-up at the dealer level in anticipation of increased demand during this period is likely to lead to increased wholesale billing by original equipment manufacturers (OEMs) during October.

However, the rating agency in its credit news digest on India's auto sector has said that production cuts by OEMs are likely to continue in the near-term with existing high dealer inventory levels. It highlights trends in sub-segments of auto sector including passenger vehicles (PVs), commercial vehicles (CVs) and two-wheelers (2Ws) with a focus on sales volumes growth, market share movement, change in commodity prices and recent rating actions.
As per the report, domestic automobile industry's sales continued their downward trend in September with a 22% year-on-year decline on weak consumer sentiments owing to the slowing economy. Inventory at dealer level remained high, leading to most OEMs continuing to implement production cuts. Over April to September, overall auto industry undertook a production cut of 13% year-on-year with 16%, 27% and 13% production cuts in PV, CV and 2W segments respectively.

The average inventory for PVs increased marginally in September to 30 to 35 days from 25 to 30 days in August. The average inventory for CVs decreased marginally in September to 50 to 55 days from 55 to 60 days in August. But, the average inventory for 2W remained high at 60 to 65 days. PV sales volume declined 24% on account of a 33% drop in the sales volume of cars. CV sales volume declined 39% in September owing to decreased industry demand on account of tight liquidity conditions amid slowed economic activity. 2W sales fell 22% on weak rural and semi-urban demand.

The CNX Nifty is currently trading at 11756.25, up by 129.10 points or 1.11% after trading in a range of 11627.35 and 11760.00. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 12.73%, Tata Steel up by 6.53%, JSW Steel up by 4.86%, Yes Bank up by 4.84% and Vedanta up by 4.39%. On the flip side, Bharti Infratel down by 5.49%, Bharti Airtel down by 3.51%, Ultratech Cement down by 0.92%, Power Grid Corporation down by 0.74% and Hindustan Unilever down by 0.59% were the top losers.

Asian market were trading mixed; Hang Seng decreased 139.47 points or 0.52% to 26,751.79, Shanghai Composite declined 14.78 points or 0.5% to 2,965.27,Jakarta Composite lost 2.27 points or 0.04% to 6,263.11 and KOSPI fell 0.62 points or 0.03% to 2,092.98. On the flip side, Straits Times advanced 15.88 points or 0.5% to 3,201.41, Taiwan Weighted strengthened 18.85 points or 0.17% to 11,333.87 and Nikkei 225 was up by 105.41 points or 0.46% to 22,972.68.