Markets reverse losses to end higher on Thursday

Reversing their losses, Indian equity bourses ended Thursday’s trading session on higher note. Markets made a flat start of the day, after India’s retail inflation based on Consumer Price Index quickened to 16-month high of 4.62% in October from 3.99% in September 2019, on the back of higher food prices. Volatility witnessed over the street, as Moody's Investors Service cut India's economic growth forecast for current year to 5.6 per cent from 5.8 per cent estimated earlier, saying GDP slowdown is lasting longer than previously expected. It expected economic activity to pick up in 2020 and 2021 to 6.6 per cent and 6.7 per cent, respectively, but the pace to remain lower than in the recent past.

However, in the last hours of the trade, key indices staged smart recovery, amid reports that India’s Wholesale price index (WPI) inflation again eased to 0.16% in the month of October 2019 as against 0.33% for the previous month and 5.54% during the corresponding month of the previous year. Investors took some support with SBI report showing that credit growth picked up rapid pace beginning September - jumping by Rs 1.08 lakh crore - mainly helped by housing, NBFC and lately MSME. The report further said the week up to Diwali has shown an increase in currency in circulation of Rs 30,871 crore from the previous week, thereby showing that people have been demanding cash in the festive season.

On the global front, European market were trading in red, despite Germany's economy expanded modestly in the third quarter supported by consumption and, thus avoided entering a widely expected technical recession. Gross domestic product grew a seasonally and calendar adjusted 0.1 percent from the previous three months. Asian markets ended mostly lower, as Japan's economy grew at the slowest pace in a year in the third quarter as trade wars and a weaker global economy hurt exports and private consumption slowed. Gross domestic product grew an annualized 0.2 percent quarterly following a revised 1.8 percent expansion in the second quarter.

Back home, the banking sector stocks ended higher, after RBI Deputy Governor MK Jain made a case for incentivizing banks to extend loans to poor in backward areas. He also urged the National Bank for Agriculture and Rural Development (NABARD) to think of steps by which funds like Rural Infrastructure Development Fund can be earmarked to the most backward credit starved regions of the country to ensure faster development. Further, telecom sector stocks remained in watch, as the Department of Telecom (DoT) issued notice to telecom operators to pay their license fees and spectrum usage charges within three months as mandated by the Supreme Court.

Finally, the BSE Sensex rose 170.42 points or 0.42% to 40,286.48, while the CNX Nifty was up by 31.65 points or 0.27% to 11,872.10.

The BSE Sensex touched a high and a low 40,348.61 and 40,026.99, respectively and there were 15 stocks advancing against 15 stocks declining, while 1 remain unchanged on the index.

The broader indices ended mixed; the BSE Mid cap index gained 0.14%, while Small cap index was down by 0.01%.

The top gaining sectoral indices on the BSE were IT up by 1.07%, Consumer Durables up by 0.87%, Bankex up by 0.71%, TECK up by 0.55% and Auto up by 0.43%, while Telecom down by 2.76%, Metal down by 1.98%, Basic Materials down by 0.92%, Capital Goods down by 0.84% and Power down by 0.60% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.67%, Infosys up by 2.04%, Bajaj Finance up by 1.65%, Maruti Suzuki up by 1.28% and HDFC Bank up by 1.25%. On the flip side, Vedanta down by 2.90%, Indusind Bank down by 2.79%, Tata Motors - DVR down by 2.29%, Tata Motors down by 2.11% and Bharti Airtel down by 1.59% were the top losers.

Meanwhile, breaching the Reserve Bank of India's (RBI) medium-term target of 4% for the first time since July 2018, India’s retail inflation based on Consumer Price Index (CPI) quickened to 16-month high of 4.62% in October from 3.99% in September 2019 on the back of higher food prices. This is the third straight month of rise in CPI. The earlier high was reported in June 2018 when the retail inflation print was recorded at 4.92%. Inflation in the food basket spiked to 7.89% in October 2019, against 5.11% the previous month, mostly due to surge in vegetable prices.

As per the data of the Central Statistics Office (CSO), Ministry of Statistics and Programme, the CPI (Rural, Urban, Combined) on Base 2012=100 for October 2019, stood at 4.29%, 5.11% and 4.62%, respectively, compared to 2.82%, 4.04% and 3.38%, respectively in October 2018. The index value of CPI for combined stood at 147.2. The data also showed that consumer food price index (CFPI) for all India Rural and Urban for October 2019 stood at 6.42% and 10.47%, respectively, compared to -0.65% and -1.15%, respectively in October 2018. The index value of CFPI for combined stood at 149.1 for the month of October.

Besides, inflation in vegetables spiked to 26.10% from 5.40% in September, while for fruits it jumped to 4.08% from 0.83%. Likewise, the prices of cereals, meat and fish, eggs grew at faster pace of 2.16%, 9.75% and 6.26%, respectively. For pulses and related products, retail inflation rose to 11.72%. However, the prices of fuel and light category continued to witness downward move at (-) 2.02% as against (-) 2.18% a month earlier. Meanwhile, inflation in housing stood at 4.58% for October, while it was 1.65% in clothing and footwear.

The CNX Nifty traded in a range of 11,895.65 and 11,802.65. There were 21 stocks advancing against 28 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were ICICI Bank up by 2.53%, Infosys up by 1.98%, Bajaj Finance up by 1.79%, HDFC Bank up by 1.39% and Maruti Suzuki India up by 1.28%. On the flip side, Bharti Infratel down by 3.94%, Indusind Bank down by 2.91%, Zee Entertainment down by 2.72%, Vedanta down by 2.63% and Hindalco down by 2.56% were the top losers.

European markets were trading in red; UK’s FTSE 100 declined 37.92 points or 0.52% to 7,313.29, France’s CAC lost 4.48 points or 0.08% to 5,902.61 and Germany’s DAX was down by 36.14 points or 0.27% to 13,193.93.

Asian markets ended mostly lower on Thursday on doubts about progress in Sino-US trade negotiations and weak data from China and Japan stoked worries that a global slowdown is deepening. Hong Kong shares ended lower amid reports the Hong Kong government will announce a curfew for the weekend, while weaker than expected Chinese data fueled concerns over the health of Chinese economy. Chinese Industrial output rose 4.7 percent year-on-year in October, data from the National Bureau of Statistics released on Thursday showed, significantly slower than expected on weakness in global and domestic demand and as a drawn-out trade war with the United States weighed on activity. Indicators showed other sectors also slowed significantly and missed forecasts with retail sales growth back near a 16-year trough and fixed asset investment growth the weakest on record. Further, Japanese shares closed down as the yen strengthened and data showed Japan's economy grew at the slowest pace in a year in the third quarter. Gross domestic product grew an annualized 0.2 percent quarterly following a revised 1.8 percent expansion in the second quarter, figures from the Cabinet Office showed. Though, Chinese shares ended higher on expectations that policymakers will ramp up stimulus measures to boost a fragile economic recovery after weak Chinese industrial data.