Key gauges recoup losses to close flat on Monday

In an extremely volatile session, Indian benchmark indices recouped most of losses to close flat on Monday as investors remained on sidelines and deferred from making any large moves ahead of RBI Monetary Policy Committee meeting outcome. The outcome of the meeting will come on December 07. There are expectations that the Reserve Bank of India MPC is likely to announce a 35 basis points (bps) rate hike. After making cautious start, key gauges fell sharply even as report stated that after pulling out money from Indian equities market in the past two months, Foreign Portfolio Investors (FPIs) made a strong come back in November with a net investment of Rs 36,329 crore on weakening of the US dollar index and positivity about overall macroeconomic trends. However, key gauges erased losses in early afternoon deals, as traders found some support with Economic Advisory Council member Sanjeev Sanyal’s statement that India is capable of sustaining an economic growth of 9 per cent for many years, even as he asserted that a high sustained GDP growth rate is key for the world to achieve the 2030 Sustainable Development Goals (SDGs).

But, markets failed to hold recovery and once again fell sharply in late afternoon session despite the Reserve Bank of India's (RBI) weekly statistical supplement showed India's foreign exchange reserves rose for the third straight week, to $550.14 billion in the week through November 25. For the week ended November 18, the country's reserves were at $547.25 billion. However, a strong services activity reading helped Indian shares to stage recovery in the last leg of the trade. As per the survey report, India’s services sector witnessed strong growth in the month of November, as business activity and sales rose at faster rates. The seasonally adjusted S&P Global India Services PMI Business Activity Index surged to 56.4 in November from 55.1 in October. Further, the S&P Global India Composite PMI Output Index -- which measures both manufacturing and services -- improved to 56.7 in November from 55.5 in October.

On the global front, Asian markets ended mostly higher on Monday as traders remained optimistic that the US Fed will slow the pace of interest rate hikes as early as next month, despite data showing stronger than expected job growth in November that allayed fears of a global economic slowdown. European markets were trading mostly in red after a survey showed business activity in the euro zone declined for a fifth month in November, adding to the likelihood that the euro zone is sliding into a mild recession. S&P Global's final composite Purchasing Managers' Index (PMI) for the region edged up to 47.8 in November from October's 23-month low of 47.3 and matching a preliminary estimate.

Finally, the BSE Sensex fell 33.90 points or 0.05% to 62,834.60 and the CNX Nifty was up by 4.95 points or 0.03% to 18,701.05.

The BSE Sensex touched high and low of 62,939.63 and 62,507.88, respectively. There were 14 stocks advancing against 15 stocks declining, while 1 stock remains unchanged on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.10%, while Small cap index was up by 0.25%.

The top gaining sectoral indices on the BSE were Metal up by 2.37%, PSU up by 0.90%, Realty up by 0.74%, Bankex up by 0.46% and Financial Services up by 0.35%, while Healthcare down by 0.47%, IT down by 0.36%, Auto down by 0.31%, TECK down by 0.29% and Telecom down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.35%, NTPC up by 1.66%, SBI up by 1.58%, Indusind Bank up by 1.38% and Power Grid Corporation up by 0.61%. On the flip side, Reliance Industries down by 1.46%, Tech Mahindra down by 1.33%, Ultratech Cement down by 0.76%, Dr. Reddy's Lab down by 0.73% and Axis Bank down by 0.61% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has said that Indian banking system's outstanding credit grew by 16.96 per cent for the fortnight ended November 18, 2022. The bank credit grew to Rs 133.29 lakh crore for the fortnight ended November 18 this year as against Rs 113.96 lakh crore on November 19, 2021.

It stated the deposit growth came at 9.30 per cent, with the overall base Rs 177.15 lakh crore as on November 18 as against Rs 162.06 lakh crore in the year-ago period. Interestingly, amid a war for deposits in the system as banks jostle to raise the liabilities to fund the elevated credit growth, the overall deposits in the system declined marginally during the fortnight as against the Rs 177.88 lakh crore as on November 4.

It can be noted that the current fiscal has seen a steady rise in credit growth driven by a variety of reasons, including economic growth, borrowers' shift to the bank as against other credit substitutes amid rising interest rates, etc. In FY 2021-22, bank credit rose by 8.59 per cent and deposits by 8.94 per cent.

The CNX Nifty traded in a range of 18,728.60 and 18,591.35. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.53%, Tata Steel up by 3.08%, UPL up by 2.49%, Coal India up by 2.07% and ONGC up by 2.02%. On the flip side, Apollo Hospital down by 1.98%, Reliance Industries down by 1.47%, Tata Motors down by 1.45%, Tech Mahindra down by 1.32% and Britannia Industries down by 1.07% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 20.06 points or 0.30% to 6,722.19 and Germany’s DAX was down by 66.81 points or 0.46% to 14,462.58. On the flip side, UK’s FTSE 100 was up by 24.11 points or 0.32% to 7,580.34.

Asian markets ended mostly higher on Monday as Hong Kong shares led the gains as businesses reopened and testing rules were relaxed in major cities of China. Chinese shares gained in spite of disappointing service sector data, with the Caixin/S&P Global services purchasing managers' index (PMI) fell to 46.7 in November, marking the lowest level in six months. Japanese shares rose marginally after the latest survey from Jibun Bank showed the services sector in Japan continued to expand in November, albeit at a slower rate. However, Seoul shares declined as robust US jobs data added to uncertainty about the pace of US rate hikes in the future.