Volatile trade continues over Dalal Street

Volatile trade continued over the Dalal Street in late morning session, with both Sensex and Nifty trading in red terrain. Mixed cues from other Asian markets impacted domestic sentiments. Traders got cautious, amid a private report stating that Indians sending money to other countries have ended up paying Rs 26,300 crore as foreign exchange fees in 2020, despite the pandemic. Market participants were taking a note of report that markets regulator Sebi came out with a new framework for investment and trading in securities by employees of Asset Management Companies (AMCs) and trustees of mutual funds.

 On the global front, Asian markets were trading mixed, after industrial output in Japan shed a seasonally adjusted 5.4 percent on month in September, the Ministry of Economy, Trade and Industry said. That missed expectations for a decline of 3.2 percent following the 3.6 percent contraction in August. On a yearly basis, industrial production sank 2.3 percent - again missing forecasts for an increase of 2.0 percent following the 8.8 percent gain in the previous month.

The BSE Sensex is currently trading at 59852.69, down by 132.01 points or 0.22% after trading in a range of 59104.58 and 60132.81. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.78%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were Metal up by 1.50%, Basic Materials up by 1.12%, Telecom up by 1.06%, Auto up by 1.04% and Consumer Durables up by 0.87%, while Energy down by 0.90% and Bankex down by 0.46% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.00%, Ultratech Cement up by 1.76%, Maruti Suzuki up by 1.57%, SBI up by 1.39% and Bharti Airtel up by 1.28%. On the flip side, Kotak Mahindra Bank down by 2.17%, Indusind Bank down by 2.12%, HDFC down by 1.53%, Reliance Industries down by 1.31% and NTPC down by 1.20% were the top losers.

Meanwhile, SBI Research in its latest report has said the Reserve Bank of India (RBI) should let the rupee rally against the dollar to contain imported inflation coming in mainly from crude prices and help push exports, as the current account risks from rising oil price can be contained at 1.4 per cent of GDP. Rallying crude and the resultant fear of the current account deficit have seen the rupee going down from 73.09 on September 1 to a low of 75.52 to a dollar on October 12. But it has again started appreciating and is presently at around 75, visible from forex market turnover -USD 2.2 billion of excess dollar supply in August - clearly showing the appreciating bias on the rupee.

Further, it stated the Reserve Bank has been continuously making forex purchases, and in FY21, it bought Rs 5.1 lakh crore worth of forex and the forex reserves swelled by USD 103.72 billion. Despite the second wave, the rupee gained strength and even went below 73 to a dollar. It noted ‘taking everything into account -- robust FDI inflows amid some volatility in FPI inflows of late -- our CAD projections stand at 1.4 per cent of GDP for the full year, which is comfortable, and if there is no extremely devastating third wave, the rupee is going to handle any taper news with relative calm.’

It added considering higher domestic inflation, as supply disruptions mount, it will not do any harm for the RBI to lean with the wind and let the rupee appreciate, as it can lead to reduced imported inflation when metal and oil prices are rising, and clearing the liquidity overhang to some extent.

The CNX Nifty is currently trading at 17836.10, down by 21.15 points or 0.12% after trading in a range of 17613.10 and 17915.85. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 2.33%, Tata Steel up by 1.98%, JSW Steel up by 1.96%, Maruti Suzuki up by 1.73% and Ultratech Cement up by 1.65%. On the flip side, Kotak Mahindra Bank down by 2.35%, Indusind Bank down by 2.18%, HDFC down by 1.60%, Reliance Industries down by 1.34% and NTPC down by 1.02% were the top losers.

Asian markets were trading mixed; Jakarta Composite soared 50.59 points or 0.78% to 6,574.67, Straits Times advanced 21.29 points or 0.66% to 3,225.11, Nikkei 225 surged 10.13 points or 0.04% to 28,830.22 and Shanghai Composite gained 5.52 points or 0.16% to 3,523.94. On the flip side, KOSPI fell 27.18 points or 0.9% to 2,982.37, Taiwan Weighted dropped 46.59 points or 0.27% to 16,995.04 and Hang Seng decreased 114.31 points or 0.45% to 25,441.42.