Markets trade marginally higher post RBI policy

Indian equity benchmarks erased initial losses and bounced back into positive territory in morning deals, after the Reserve Bank of India decided to keep the benchmark interest rate unchanged at 4 percent but maintained an accommodative stance, implying more rate cuts in the future if the need arises to support the economy hit by the COVID-19 crisis. Traders took some support with Assocham’s report that India's economy has shown a remarkable resilience in the last few months, braving the impact of the coronavirus pandemic with lead indicators such as manufacturing PMI and exports returning to growth trajectory.  However, gains remain capped with former Reserve Bank Governor C Rangarajan’s statement that the combined fiscal deficit of states and the centre is likely to go up to 14 per cent during the current year (FY21) against the mandated level of 6 per cent. He also said banks should neither be timid nor adventurous while lending as the loans of today should not become NPAs of tomorrow.

On the global front, Asian markets were trading mostly in red, amid cautious trades following the mixed signals from U.S. lawmakers on stimulus talks. While U.S. President Donald Trump said administration officials and Democrats are 'starting to have some very productive talks', House Speaker Nancy Pelosi rejected the idea of passing a stand-alone bill providing aid to airlines without a broader relief package. Meanwhile, , the Ministry of Internal Affairs and Communications said that the average of household spending in Japan was down 6.9 percent on year in August, coming in at 276,360 yen. That was in line with expectations following the 7.6 percent annual decline in July.

Back home, on the sectoral front, stocks related to tourism sector remained in focus as the Federation of Associations in Indian Tourism and Hospitality (FAITH) said the tourism sector is going to be the next growth driver for India but to achieve that, it needs to survive the impact of the COVID-19 pandemic and revive. Currently, each vertical of the tourism industry is under deep stress.

The BSE Sensex is currently trading at 40315.57, up by 132.90 points or 0.33% after trading in a range of 40066.54 and 40322.14. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.10%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.49%, Bankex up by 0.83%, Industrials up by 0.80%, Metal up by 0.52% and Telecom up by 0.46%, while Realty down by 0.98%, FMCG down by 0.56%, IT down by 0.28%, Utilities down by 0.22% and Basic Materials down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.95%, Tata Steel up by 1.89%, HDFC up by 1.59%, HDFC Bank up by 1.21% and ICICI Bank up by 1.17%. On the flip side, Ultratech Cement down by 1.45%, Hindustan Unilever down by 1.43%, Bajaj Auto down by 1.23%, Asian Paints down by 1.23% and Tech Mahindra down by 1.22% were the top losers.

Meanwhile, Assocham in its Assessment on State of Economy (AASE) report said that India's economy has shown a remarkable resilience in the last few months, braving the impact of the coronavirus pandemic with lead indicators such as manufacturing PMI and exports returning to growth trajectory. The report pointed towards a further pick up in the coming months. AASE noted ‘be it India's Purchasing Managers' Index (PMI - Manufacturing) or PMI for Services, robust recovery is visible. The PMI for Manufacturing expanded to 56.8 in September 2020, the highest since January 2012. The PMI for Services expanded for the fifth straight month in September to 49.8 from 41.8 in August.’

The report revealed as more and more services reopen and the consumers learn more about dealing with the pandemic, the GST collections are expected to pick up further. The country's Goods and Services Tax (GST) collections grew 4 per cent to Rs 95,480 crore in September. The rail freight, yet another critical indicator, showed a 15 per cent growth YoY in September. Similarly, annualised power consumption was up 4.6 per cent for the month at 113.5 billion units.

Besides, Assocham secretary general Deepak Sood said ‘as a nation, we are giving a solid fight to COVID-19 pandemic. With the unlocking of the economy almost complete, people are returning to work, wearing masks and maintaining social distancing. However, a continuous campaign by the Centre, states and the local governments would be required to reinforce these habits further.’ He also stated that undaunted by the health emergency, the government under the leadership of Prime Minister Narendra Modi, has pressed the accelerator for reforms in labour laws, agriculture, defence production and incentives to domestic manufacturing.

The CNX Nifty is currently trading at 11867.80, up by 33.20 points or 0.28% after trading in a range of 11805.20 and 11883.30. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 3.15%, HDFC up by 2.40%, Tata Steel up by 1.67%, HDFC Bank up by 1.54% and Shree Cement up by 1.45%. On the flip side, Grasim Industries down by 1.71%, UPL down by 1.54%, Tech Mahindra down by 1.48%, Hindustan Unilever down by 1.42% and TCS down by 1.23% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 88.64 points or 0.37% to 23,558.43, Jakarta Composite lost 5.40 points or 0.11% to 5,033.74 and Straits Times trembled 0.07 points or 0% to 2,543.04. On the flip side, Shanghai Composite gained 60.78 points or 1.89% to 3,278.83 and Hang Seng increased 21.60 points or 0.09% to 24,214.95.