Sensex, Nifty add gains in late morning deals

Indian equity benchmarks extended their gaining rally in late morning session, with both Sensex and Nifty trading with strong gains. Positive cues from other Asian markets helped key indices to maintain momentum. Domestic sentiments were positive, even after Indian manufacturing sector lost momentum in the month of November, amid slower increases in factory orders, exports, buying levels and output. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 56.3 in November as against 58.9 in October, although it well above the 50-level that separates growth from contraction.

On the global front, Asian markets were trading mostly higher, after China's manufacturing sector logged its strongest growth in a decade in November, to indicate a sustained recovery from the Covid-19 outbreak. The survey data from IHS Markit showed that the Caixin manufacturing Purchasing Managers' Index rose to 54.9 in November from 53.6 in October. A score above 50 indicates expansion in the sector. This was the highest score since November 2010. The sector has expanded in each of the past seven months.

The BSE Sensex is currently trading at 44528.70, up by 378.98 points or 0.86% after trading in a range of 44118.10 and 44568.01. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.66%, while Small cap index was up by 0.74%.

The top gaining sectoral indices on the BSE were Realty up by 2.79%, Utilities up by 1.70%, Oil & Gas up by 1.55%, Basic Materials up by 1.54% and IT up by 1.52%, while Consumer Durables down by 0.08% was the only losing index on BSE.

The top gainers on the Sensex were Sun Pharma up by 4.13%, Infosys up by 2.60%, Ultratech Cement up by 2.31%, ONGC up by 2.23% and ICICI Bank up by 2.12%. On the flip side, Titan Co down by 1.02%, Nestle down by 0.88%, Kotak Mahindra Bank down by 0.72%, Mahindra & Mahindra down by 0.08% and Bajaj Finserv down by 0.01% were the top losers.

Meanwhile, Chief Economic Adviser (CEA) K V Subramanian has said that there is an upside potential in the estimates about the economy during the current financial year (FY21) amid a faster-than-expected recovery. He said the final print could be better than Gross Domestic Product (GDP) estimates given by various institutions, including the Reserve Bank of India, which projected contraction of 9.5 percent during 2020-21. He also noted that with pick-up in manufacturing, India's economy recovered faster than expected in the September quarter (Q2) of fiscal year 2020-21 (FY21). The GDP clock a lower contraction of 7.5 percent in Q2FY21 as compared to the contraction of 23.9 percent in the first quarter of the 2020-21 fiscal (April 2020 to March 2021).

Compared with the estimates provided by several of the analysts, Subramanian said, the Q2 numbers, have been more encouraging, which were being reflected in the high frequency indicators earlier as well. He also said sustainability of the economic recovery depends critically on the spread of the pandemic, he said adding that while the peak of first wave was crossed in September, winter months must warrant caution. Giving outlook for the near future, he said, ‘we should be cautiously optimistic and the caution is warranted because economic impact is primarily due to the pandemic.’ Given the uncertainty, he said, it is difficult to predict if positive territory can be hit in the third or fourth quarter.

As far as the second half of the current fiscal is concerned, CEA said there is uncertainty although there is sharp recovery especially in the manufacturing sector. But given the uncertainty, he said ‘I think it would be difficult to say whether we will hit the positive in Q3 or Q4. My sense is that we should definitely be continuing this recovery provided that the pandemic remains in control.’ He pointed out that some sectors that are affected by social distancing will continue to experience demand slump till the time the pandemic does not go away. On food inflation, he said the prices are likely to soften in the third quarter of this fiscal year.

The CNX Nifty is currently trading at 13073.90, up by 104.95 points or 0.81% after trading in a range of 12962.80 and 13083.30. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 6.48%, Sun Pharma up by 4.34%, Grasim Industries up by 3.52%, UPL up by 3.21% and Infosys up by 2.75%. On the flip side, Nestle down by 2.07%, Titan Co down by 1.27%, Kotak Mahindra Bank down by 1.12%, HDFC Life Insurance down by 0.74% and Mahindra & Mahindra down by 0.41% were the top losers.

Asian markets were trading mostly higher; Nikkei 225 rose 346.23 points or 1.31% to 26,779.85, Straits Times gained 13.51 points or 0.48% to 2,819.46, Hang Seng surged 225.37 points or 0.86% to 26,566.86, Taiwan Weighted jumped 131.10 points or 0.96% to 13,853.99, KOSPI rose 34.86 points or 1.35% to 2,626.20 and Shanghai Composite soared 44.28 points or 1.31% to 3,436.04. On other hand, Jakarta Composite was down by 9.67 points or 0.17% to 5,602.75.