Benchmarks eke out slender gain on Thursday

Indian equity benchmarks ended the Thursday’s trade marginally in green, as traders remained on sidelines ahead of outcome of Reserve Bank of India’s (RBI) December Policy Meet. Markets started the day on optimistic note as traders took encouragement with Niti Aayog Vice Chairman Rajiv Kumar’s statement that the Indian economy is coming out of the pandemic-induced degrowth and GDP growth will enter the positive territory in the fourth quarter of this fiscal. Some support also came with ICRA Ratings’ latest report where it said that the Indian corporate sector, which gradually returned to normalcy from the second quarter of the current fiscal, is likely to sustain improvement in the third quarter, aided by strong festive demand. Some support also came with Moody's Investors Service’s statement that conditions will improve for Indian corporates next year as economic activity picks up steam post-lockdown and earnings grow on the back of widespread demand revival across sectors. It added that most companies' earnings will grow as demand starts to recover following a sharp slump, and financially strong companies will maintain good access to funding, but speculative-grade issuers will face challenges.

Market participants started paring gains and continued booking profits till end of the day which led markets to end near neutral lines, as traders turned cautious after the growth of India’s service sector slowed in the month of November, although it remained well above the 50-level that separates growth from contraction, with a further upturn in new work supporting business activity growth and the first rise in employment for nine months. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index fell to 53.7 in November from 54.1 in October. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - eased to 56.3 in November from 58.0 in October.

Feeble global cues too dampened sentiments with all the European counters making a red start as global markets pause for breath, awaiting more news on U.S. stimulus measures and coronavirus vaccine approval. Asian markets ended mostly higher on Thursday, after China's service sector expanded strongly in November amid greater customer demand and a sustained recovery in market conditions after the coronavirus disease outbreak. The survey data from IHS Markit showed that the services Purchasing Managers' Index rose to 57.8 in November from 56.8 in the previous month. The rate of growth was the second fastest since April 2010, exceeded only by that recorded in June 2020. New orders climbed the most since April 2010 as export sales grew for the first time since June.

Back home, technology stocks remained in limelight after a California federal judge in the US struck down two of Donald Trump administration's recent rules meant to drastically curtail the number of visas issued to skilled foreign workers every year. Shares of electric utilities companies remained in focus on report that in October, power generation grew 9.7 per cent year-on-year (YoY) to 116.6 billion units on the back of continued economic revival. On a month-on-month (MoM) basis, it was down 3.1 per cent as residential demand softened in the northern region with the onset of winter. Generation is likely to rise 7.9 per cent YoY in November 2020 to 109.5 billion, driven by increasing economic activity, according to Emkay Global Financial Services.

Finally, the BSE Sensex slipped 14.61 points or 0.03% to 44,632.65, however the CNX Nifty was up by 20.15 points or 0.15% to 13,133.90.

The BSE Sensex touched high and low of 44,953.01 and 44,551.42, respectively and there were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index jumped 0.85%, while Small cap index was up by 0.68%.

The top gaining sectoral indices on the BSE were PSU up by 2.79%, Metal up by 2.53%, Utilities up by 2.00%, Oil & Gas up by 1.77% and Power up by 1.64%, while IT down by 0.65%, TECK down by 0.55% and Bankex down by 0.05%, were the few losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 7.45%, ONGC up by 4.54%, Asian Paints up by 4.08%, NTPC up by 4.01% and SBI up by 3.87%. On the flip side, HDFC Bank down by 2.13%, TCS down by 1.48%, Bajaj Auto down by 1.31%, Infosys down by 1.27% and Bharti Airtel down by 1.02% were the top losers.

Meanwhile, Moody's Investors Service has said that conditions will improve for Indian corporates next year as economic activity picks up steam post-lockdown and earnings grow on the back of widespread demand revival across sectors. It added that most companies' earnings will grow as demand starts to recover following a sharp slump, and financially strong companies will maintain good access to funding, but speculative-grade issuers will face challenges. It noted that broad-based demand revival and a low base in 2020 will support strong GDP growth of 10.8 per cent in India in fiscal 2022 ending March 2022, following a decline of around 10.6 per cent in fiscal 2021 - the country's first contraction in four decades.

The agency said in 2021, conditions will improve for Indian corporates as economic activity gathers pace post-lockdown and earnings grow on the back of widespread demand revival across sectors, underpinning Moody's stable outlook for the corporates next year. It said ‘A combination of higher earnings and reduced capital spending will support deleveraging over the next 12-18 months’. It added overall recovery will remain fragile as new infections continue to grow - although at a slower rate - and therefore new lockdowns cannot be ruled out, which would hinder consumer demand and recovery.

It said the low interest rate environment and widespread credit availability will allow corporates with strong balance sheets to refinance and grow. But liquidity will be tight for financially weaker issuers, exacerbating their operating challenges. Moody's rates 21 Indian corporates across five key sectors: oil and gas, telecommunications, automobile manufacturers and suppliers, steel and mining. It said the outlook for the Indian corporate sector reflects its expectations for fundamental business conditions for the sector over the next 12-18 months.

The CNX Nifty traded in a range of 13,107.90 and 13,216.60 and there were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 7.33%, NTPC up by 4.22%, ONGC up by 4.18%, Hindalco up by 4.03% and SBI up by 3.83%. On the flip side, SBI Life Insurance down by 2.00%, HDFC Bank down by 1.84%, TCS down by 1.44%, Infosys down by 1.39% and Bajaj Auto down by 1.19% were the top losers.

European markets were trading in red, France’s CAC declined 24.97 points or 0.45% to 5,558.04, Germany’s DAX shed 72.68 points or 0.55% to 13,240.56 and UK’s FTSE 100 was down by 7.95 points or 0.12% to 6,455.44.

Asian markets ended mostly higher on Thursday as investor optimism around the corona virus vaccine after drug-makers Pfizer and BioNTech said they won permission for emergency use of their COVID-19 vaccine in Britain, which would be one of the first countries to begin vaccinating its population against the virus. Further, hopes for further fiscal stimulus in the United States also kept the market sentiment positive. Chinese shares ended lower as investors were remained cautious following Sino-US tensions after the US House of Representatives passed legislation that would increase oversight of Chinese companies on US exchanges. Although data showed the services sector in China continued to expand at a faster rate, pointing to a further recovery of business activity in the wake of the corona virus outbreak. The China Caixin services Purchasing Managers' Index (PMI) rose to 57.8 from October's 56.8.