Benchmarks trade firm in early deals; Nifty above 11,900 mark

Indian equity benchmarks made optimistic start and are trading firm in early deals on Friday led by gains in telecom, auto and banking stocks. 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. Market participants overlooked 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.

Global cues also remained supportive with all the Asian markets trading in green amid renewed trade deal optimism. Investors’ sentiment was boosted after White House economic adviser Larry Kudlow said that the US was getting close to a trade agreement with China. Back home, Council for Leather Exports (CLE) said that the ongoing US-China trade war provides huge opportunities to leather exporters to increase their shipments to America. In scrip specific development, Vodafone Idea came under pressure after reporting consolidated net loss of Rs 50,921.90 crore in Q2 September 2019 as compared with net loss of Rs 4,973.80 crore in Q2 September 2018. Total income rose 42.36% to Rs 11,275.90 crore in Q2 September 2019 over in Q2 September 2018.

The BSE Sensex is currently trading at 40482.10, up by 195.62 points or 0.49% after trading in a range of 40396.91 and 40540.02. There were 28 stocks advancing against 2 stocks declining, while 1stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.39%, while Small cap index was up by 0.33%.

The top gaining sectoral indices on the BSE were Telecom up by 1.91%, Auto up by 1.05%, Bankex up by 0.86%, PSU up by 0.82% and Metal was up by 0.57%, while Consumer Durables down by 0.19%, Healthcare down by 0.16% and Realty was down by 0.07% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 3.06%, SBI up by 2.84%, Tata Motors up by 2.37%, Bharti Airtel up by 2.19% and Maruti Suzuki up by 1.24%. On the flip side, TCS down by 0.34% and HDFC down by 0.26% were the only 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 is currently trading at 11924.15, up by 52.05 points or 0.44% after trading in a range of 11899.15 and 11943.30. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were SBI up by 2.75%, Bharti Infratel up by 2.54%, Tata Motors up by 2.36%, GAIL India up by 1.64% and Bharti Airtel up by 1.50%. On the flip side, Cipla down by 3.12%, Indian Oil Corporation down by 2.23%, BPCL down by 0.90%, Titan Company down by 0.71% and Dr. Reddy’s Lab down by 0.51% were the top losers.

All Asian markets were trading green; Hang Seng increased 85.17 points or 0.32% to 26,408.86, Nikkei 225 surged 158.41 points or 0.68% to 23,299.96, Jakarta Composite soared 30.91 points or 0.51% to 6,129.86, Taiwan Weighted strengthened 81.23 points or 0.71% to 11,531.65, Straits Times advanced 3.15 points or 0.1% to 3,235.00, Shanghai Composite gained 0.95 points or 0.03% to 2,910.82 and KOSPI was up by 22.69 points or 1.06% to 2,161.92.