Bourses recede from fresh record highs to close marginally higher

Indian equity bourses receded from fresh record highs to close marginally higher on Thursday. The start of the day was fabulous, aided by Economist Intelligence Unit’s report that India & China are projected to see accelerated economic growth in the fourth quarter of this year, bucking trends in the US & the European Union. It added that the real GDP growth of India in the December-ending quarter is expected to be the highest among G7 & BRICS nations. Traders also got comfort with a private report that Indian companies have ranked third in Asia's overall environmental sustainability out of eight markets studied, with an average score of 63.12, which is slightly exceeded the regional average of 62.34 points.

In the last leg of the trading session, markets cut most of their gains, after credit rating agency, India Ratings and Research’s (Ind-Ra) analysis of data of Annual Survey of Industries (ASI) indicated slowdown in labour productivity growth in the Indian organized manufacturing sector, which grew at an average annual rate of 3.7% during FY16-FY18 (FY11-FY15: 7.4%, FY06-FY10: 10.3%, FY01-FY05: 9.6%), however, it fell to 2.6% and 2.9% in FY17 and FY18, respectively. But, key indices managed to settle above their respective neutral lines, as Commerce and Industry Minister Piyush Goyal assured that start-ups will never be harassed and that the government is taking steps to promote them.

On the global front, European markets were trading in red, as Turkey's trade deficit in September widened amid a rise in both exports and imports. The data from the Turkish Statistical Institute showed that the trade deficit rose to $2.056 billion in September from $1.929 billion in the same month last year. Asian markets ended in green, after Japan's consumer confidence rose in October after falling in the previous month. The data from the Cabinet Office showed that the consumer confidence index rose to a seasonally adjusted 36.2 in October from 35.6 in September. The indicators measuring overall livelihood expectations improved to 34.5, while the employment perception dropped to 40.6 in October.

Back home, tyre and rubber industry stocks remained in watch, after the Government of India has started a probe into alleged exports subsidization on a particular kind of rubber by South Korea, which is impacting the domestic industry. Further, stocks related to transport and highways sector also remained in focus, as the Minister of State for Road Transport and Highways V K Singh said that the government is working on ways to address various issues, including financing, for basket of highway projects worth Rs 15 lakh crore.  He noted that infrastructure and highways is the most profitable sector and can propel the growth of economy.

Finally, the BSE Sensex gained 77.18 points or 0.19% to 40,129.05, while the CNX Nifty was up by 33.35 points or 0.28% to 11,877.45.

The BSE Sensex touched a high and a low 40,392.22 and 40,054.89, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 1.14%, while Small cap index was up by 0.94%.

The top gaining sectoral indices on the BSE were TECK up by 1.97%, PSU up by 1.94%, Telecom up by 1.87%, IT up by 1.75% and Realty up by 1.30%, while Metal down by 0.51%, Energy down by 0.45% and Capital Goods down by 0.14% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 24.03%, SBI up by 7.69%, Infosys up by 3.79%, Tata Motors up by 3.40% and Tata Motors - DVR up by 2.19%. On the flip side, Tech Mahindra down by 2.09%, Tata Steel down by 1.95%, Mahindra & Mahindra down by 1.77%, ICICI Bank down by 1.74% and Axis Bank down by 1.56% were the top losers.

Meanwhile, the rating agency ICRA in its latest report has said the resolution of stressed thermal assets remained quiet despite various measures undertaken by the government and lenders. It said only about 10 percent of the 40 GW stressed coal-based capacity achieving resolution, mainly through acquisition by a new sponsor. It noted that the balance capacity is under various stages of resolution, including through Insolvency and Bankruptcy Code (IBC).

According to the report, the resolution of 12 GW gas-based capacity continues to remain uncertain, given the inadequate availability of domestic gas and absence of any policy measures for use of imported R-LNG with subsidy support as well as the measures to incentivise such projects to meet the peaking/ancillary power demand. It also said the improvement in the discoms' financial position on all India level remained lower than expected, which can hamper the sustainability of demand growth and signing of new long-term power purchase agreements (PPAs).

About the power sector, ICRA said that the all India electricity demand growth slowed down to 4.4 percent in the first six month of FY20, from 6 percent growth witnessed in the corresponding period of previous year. It noted that the slowdown in electricity demand was primarily witnessed in the months of August 2019 and September 2019, despite a healthy growth of 7.4 per cent in Q1 FY20. It added that the slowdown can be attributed to lower demand from household and agriculture segments following heavy rains in August 2019 and September 2019 and moderation in demand from industrial segment.

The CNX Nifty traded in a range of 11,945.00 and 11,855.10. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 23.77%, Zee Entertainment up by 10.78%, SBI up by 7.80%, Grasim Industries up by 4.77% and Infosys up by 4.00%. On the flip side, JSW Steel down by 2.86%, IOC down by 2.14%, Tata Steel down by 2.06%, Axis Bank down by 2.05% and Tech Mahindra down by 2.04% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 70.40 points or 0.96% to 7,260.38, France’s CAC fell 34.57 points or 0.6% to 5,731.30 and Germany’s DAX was down by 83.41 points or 0.65% to 12,826.82.

Asian markets ended mostly higher on Thursday after the US Federal Reserve cut interest rates by 25 basis points as widely expected to keep economic expansion on track, but indicated it is ready to hold off on further rate cuts for now. Meanwhile, the market showed scant reaction to the Bank of Japan's decision to modify its forward policy guidance by offering a stronger signal it may cut interest rates in future. Investors also digested news that Chile has cancelled the Asia-Pacific Economic Cooperation summit where US President Donald Trump and Chinese president Xi Jinping were set to sign an interim agreement to end the 15-month trade war.

Japanese shares ended up after data showed Industrial production in Japan was up a seasonally adjusted 1.4 percent month-on-month in September. That beat forecasts for an increase of 0.4 percent following the 1.2 percent decline in August. On a yearly basis, industrial output was up 1.1 percent - again beating expectations for a decline of 0.1 percent following the 4.7 percent drop in the previous month. Though, Chinese shares ended lower after data showed China's factory activity slipped to an eight month-low in October. The manufacturing PMI fell to 49.3 from 49.8 a month ago. China's service sector also logged weaker growth in October, with the corresponding index coming in at 52.8, down from 53.7 in September.