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Benchmarks stage splendid performance; bulls wake up in late trade

Bulls which woke up in last leg of trade mainly helped the benchmarks to end near intraday high levels on Thursday, with frontline gauges ending near their crucial 10,100 (Nifty) and 32,200 (Sensex) levels, as investors took to hefty across the board buying ahead of macroeconomic data such as consumer price index (CPI)-based inflation for September and Index of Industrial Production (IIP) for August due later in the day. Markets, soon after a cautious start gained momentum and traded with traction through the session, as sentiments remained upbeat on report that direct tax collections in the first six months of the current fiscal stood at Rs 3.86 lakh crore, growing by 15.8 per cent over the same period last year. Gross collections (before adjusting for refunds) have increased by 10.3 per cent to Rs 4.66 lakh crore during April to September. Traders also took some encouragement with report that the newly constituted Economic Advisory Council to the Prime Minister (EAC-PM) wants the government to stick to its fiscal consolidation road map and has suggested that stimulus to the industry should not be at the cost of fiscal prudence. 

Markets extended gains in last leg of trade after index heavyweight Reliance Industries (RIL) hit its record high ahead of its second quarter earnings slated to be released on Friday. A strong rally in Tata Consultancy Services also contributed to the gains. TCS is scheduled to report its Q2 numbers later in the day. Some support also came with finance minister Arun Jaitley’s statement that the series of reforms like demonetization and Goods and Services Tax (GST) has put Indian economy on a far stronger track. Jaitley added that these are structural changes. And these structural changes, I think have put the Indian economy on a far more sound track so that we can look forward for a much cleaner much bigger India economy in the days and years to come. Separately, Department of Economic Affairs (DEA) Secretary Subhash Chandra Garg expressed hope that India’s GDP might return to 7% plus growth by next year as all indicators point to an economic turnaround. The country’s economic slowdown has hit its bottom and will be riding the growth wave one again.

Firm trading in European counters too aided sentiments with investors awaiting data and monitoring speeches from central bankers at the International Monetary Fund’s (IMF) annual meeting in Washington D.C. Euro zone industrial output rose by far more than expected and at its highest rate in nine months in August. Asian markets ended mostly in green after the latest FOMC minutes showed Fed officials expressing a strong degree of caution over the timing of future interest-rate increases.

Back home, stocks related to oil and gas counter edged higher, as the government rationalised the tax rates on upstream oil and gas operations, while the Petrol pump dealers called off their proposed strike on October 13. Mixed reactions were witnessed in telecom stocks on report that the Telecom Commission’s recent move to extend the tenure of payments for auctioned airwaves will improve telcos’ cash flows over the next 6-7 years, but the industry said it will still end up paying nearly an additional Rs 30,000 crore to the government as the payouts will continue for a much longer span.

Finally, the BSE Sensex surged 348.23 points or 1.09% to 32,182.22, while the CNX Nifty was up by 111.60 points or 1.12% to 10,096.40.

The BSE Sensex touched a high and a low of 32,209.03 and 31,813.67, respectively and there were 25 stocks on gaining side as against 5 stocks on losing side on the index, while 1 stock remained unchanged.

The broader indices ended in green; the BSE Mid cap index gained 0.98%, while Small cap index was up by 1.15%.

The top gaining sectoral indices on the BSE were Energy up by 1.95%, Telecom up by 1.93%, Metal up by 1.90%, Realty up by 1.49% and FMCG up by 1.18%, while there were no lowers on the BSE sectoral front.

The top gainers on the Sensex were Reliance Industries up by 3.82%, Sun Pharma up by 2.59%, TCS up by 1.92%, Axis Bank up by 1.77% and Hindustan Unilever up by 1.71%. On the flip side, Bharti Airtel down by 1.17%, Coal India down by 0.46%, Infosys down by 0.37%, Power Grid down by 0.17% and Asian Paints down by 0.03% were the top losers.

Meanwhile, the rating agency ICRA in its latest report has said that profit pressure of textiles exporters is likely to reduce by third quarter of fiscal year 2017-18, with easing prices of cotton from mid-September 2017 onwards. It pointed out that the pressures being observed on profitability, debt levels across the sector are likely to fall with the industry focusing on sweating the existing assets and undertaking limited debt-funded capacity additions. It also noted that since the past few months, the exporters are facing multiple headwinds, which have led to constrained growth as well as pressures on profitability.

Adding further, the rating agency has said that textile exporters have been facing subdued demand trends in the key importing countries as well as competitive pressures from Bangladesh and Vietnam over the past few years. Apart from this, it observed that unfavorable currency exchange rate fluctuations, high raw material prices in the past 6-9 months coupled with recent revision in duty drawback rates have also added to their woes. It also stated that pressures on textile exporters have become more severe with strengthening of Indian rupee against currencies of key competing nations during the current calendar year, which reduced competitiveness of Indian exporters from their counterparts.

With exports accounting for more than one-third of the Indian textile market, the report stated that this is a matter of concern, even as there is a large domestic market. It also highlighted that the slowdown in apparels segment has mainly been on account of subdued demand conditions in key textile-consuming regions of the US and European Union, which account for a majority of exports from India. Besides, it noted that cotton-yarn exports have been under pressure largely due to decline in demand from China, which used to account for more than 40 percent of total cotton yarn exports from India till last year. It added that cotton yarn exports accounted for only 17 percent of the total in the first four months of FY18.

The CNX Nifty traded in a range of 10,104.45 and 9,977.10. There were 40 stocks in green as against 10 stocks in red on the index.

The top gainers on Nifty were Hindalco up by 6.01%, Bharti Infratel up by 5.31%, Reliance Industries up by 4.22%, Sun Pharma up by 2.39% and Vedanta up by 2.14%. On the flip side, Bharti Airtel down by 1.00%, Ultratech Cement down by 0.79%, Indian Oil Corporation down by 0.77%, UPL down by 0.45% and SBI down by 0.44% were the top losers.

European markets were trading mostly in green; Germany’s DAX increased 2.94 points or 0.02% to 12,973.62 and UK’s FTSE 100 was up by 7.58 points or 0.1% to 7,541.39, while France’s CAC was down by 7.79 points or 0.15% to 5,354.62.

Asian equity markets ended mostly higher on Thursday after the latest FOMC minutes showed Fed officials expressing a strong degree of caution over the timing of future interest-rate increases. Many participants thought another increase in interest rates later this year is ‘likely to be warranted’ if the medium-term outlook remained broadly unchanged. However, they also expressed concern about persistently weak inflation. Japanese shares closed at a more than two-decade high as polls suggesting that Prime Minister Shinzo Abe's ruling coalition is heading for a two-thirds majority in forthcoming election helped offset concerns over a firmer yen. Meanwhile, Chinese shares ended little changed with a negative bias ahead of the Communist Party Congress starting next week.

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