Markets pare most gains; end marginally higher

Indian equity benchmarks wiped out most of their intraday gains to end marginally in green on Friday, tracking a firm trend in global peers. Trading for the day began on a firm note, as traders took encouragement with report that even after the flurry of sops given to various industries after the budget, Union MSME Minister Nitin Gadkari has said the government will create a special financial scheme for 10 industry segments which are import-driven. He said the government has created a scheme to support industries where imports are high by providing special financial assistance. Traders also took note that in a relief to taxpayers, the government extended the due dates for filing GST annual returns for 2017-18 to December 31 and for the financial year 2018-19, to March 31 next year. The dates for filing the reconciliation statement has also been extended accordingly. In another relief, it has also decided to simplify the two GST forms by making various fields of these forms as optional.

The market breadth remained optimistic with Prime Minister Narendra Modi’s statement that despite recession at the global level, BRICS countries accelerated economic growth, drove millions out of poverty and achieved new breakthroughs in technology and innovation. Adding some solace, Union Minister Pratap Chandra Sarangi said that the MSME sector plays a crucial role in achieving the Centre's target of making the country $5 trillion economy. He said the MSME sector is the largest employment generator after agriculture in the country. However, in dying hour of trade, key indices gave up most of their gains to come off their intraday high points, as market-men got anxious with SBI research report stating that surplus rainfall in August and September is likely to keep food and vegetable prices elevated going forward, and retail inflation may average at around 4 per cent in FY20. 

On the global front, Asian markets ended mostly higher on Friday, while European markets were trading mostly in green, propelled by White House comments suggesting Washington and Beijing were close to striking a trade deal, reviving hopes the tariff war may near an end. Back home, stocks related to steel sectors remained in focus, as Union Steel Minister Dharmendra Pradhan stressed on the need to make India self-sufficient in high grade steel and sought collective efforts of the industry to make the sector future-ready.

Finally, the BSE Sensex rose 70.21 points or 0.17% to 40,356.69, while the CNX Nifty was up by 23.35 points or 0.20% to 11,895.45.

The BSE Sensex touched high and low of 40,650.06 and 40,308.09, respectively and there were 12 stocks advancing against 19 stocks declining.

The broader indices ended mixed; the BSE Mid cap index gained 0.63%, while Small cap index was down by 0.13%.

The top gaining sectoral indices on the BSE were Telecom up by 8.40%, Bankex up by 0.90%, PSU up by 0.67%, TECK up by 0.64% and Healthcare up by 0.62%, while Power down by 0.76%, FMCG down by 0.60%, IT down by 0.44%, Oil & Gas down by 0.41% and Auto down by 0.40% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 8.42%, SBI up by 5.19%, Tata Motors - DVR up by 1.96%, Kotak Mahindra Bank up by 1.60% and Sun Pharma up by 1.18%. On the flip side, Hero MotoCorp down by 1.85%, Bajaj Auto down by 1.43%, Maruti Suzuki down by 1.38%, ITC down by 1.30% and Vedanta down by 1.29% were the top losers.

Meanwhile, SBI research in its Ecowrap report has said that retail inflation may average at around 4% in the current fiscal year (FY20). It said surplus rainfall in August and September is likely to keep food and vegetable prices elevated going forward. In October, inflation based on the Consumer Price Index (CPI) spiked to a 16-month high of 4.62% on costlier food items. Besides, in 2019 five states- Rajasthan, Madhya Pradesh, Maharashtra, Gujarat, and Karnataka bore the brunt of excess rainfall and were affected by severe floods. The surplus rainfall during August and September seriously damaged many Kharif crops.

The report said ‘going forward, thus, food and vegetable prices could remain elevated and inflation prints in November still may be on a higher side due to the low base in 2018. We expect FY20 CPI to now average closer at 4%’. In the fourth bi-monthly monetary policy announced in October, RBI had projected at 3.5-3.7% for H2 of FY20 and 3.6% for the first quarter of FY21. The report further said even as food CPI will remain elevated, core CPI will go below 3% in this fiscal.

As per the report, the Reserve Bank of India (RBI) may cut repo rate in the upcoming December monetary policy meeting and may pause thereafter on concerns over inflation. It added that ‘We expect a December rate cut, but beyond December it will be a close decision (as inflation prints beyond October will remain elevated). Thus, it will be better if the rate cut is front loaded in December.

The CNX Nifty traded in a range of 11,973.65 and 11,879.25. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 8.87%, Bharti Airtel up by 8.43%, SBI up by 5.20%, Grasim Industries up by 2.89% and Cipla up by 2.63%. On the flip side, Indian Oil Corp. down by 3.76%, Hero MotoCorp down by 1.87%, BPCL down by 1.57%, Maruti Suzuki down by 1.38% and Vedanta down by 1.32% were the top losers.

European markets were trading mostly in green; France’s CAC increased 30.09 points or 0.51% to 5,931.17 and Germany’s DAX rose 34.63 points or 0.26% to 13,214.86, while UK’s FTSE 100 decreased 13.91 points or 0.19% to 7,278.85.

Asian markets ended mostly higher on Friday on revived hopes of a Sino-US trade deal. White House economic adviser Larry Kudlow said that phase one of a trade deal between the world’s two largest economies was getting close, while Chinese Ministry of Commerce spokesman Gao Feng continued Beijing’s call for a removal of existing tariffs. Japanese shares ended higher as the safe-haven yen weakened. The sentiment also improved further after overnight data showed Japan’s final industrial production advanced 1.3% on an annual basis in September, compared to a fall of 4.7% in the previous month. Market participants and preliminary figures had indicated industrial production to register a rise of 1.1%. Though, Chinese shares closed lower, despite China's central bank unexpectedly adding liquidity to the banking system to help lenders through the tax season. Investors also ignored data showing that China's house prices logged a moderate growth in October.