Published on 2/12/2020 5:15:56 PM | Source: LKP Securities Ltd

Benchmarks end volatile trade on quiet note - LKP Securities

Posted in Market Outlook| #Market Outlook #LKP Securities Ltd

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Benchmarks end volatile trade on quiet note

Indian equity benchmarks ended the volatile day of trade on quiet note on Wednesday, as traders remained on sidelines ahead of outcome of Reserve Bank of India’s (RBI) December Policy Meet, schedule to take place from December 02 to December 04. Markets started the session on cautious note as sentiments remained downbeat with ICRA’s latest report where it has said that debt resolution through the insolvency and bankruptcy code (IBC) and the resultant realisation for financial creditors has taken a hit so far this fiscal due to the pandemic that led to suspension of fresh proceedings. Markets extended losses in second half of the day amid reports that COVID-19 has drastically affected the investment climate in all economies of the world, causing a sharp decline in the demand and supply equilibrium everywhere. India has been no exception to this unprecedented economic shock. Yet, investment sentiment in the Indian economy has been buoyed by the frequent and active intervention of the Government of India despite being hit by a world-wide pandemic.

However, markets witnessed recovery and markets regained almost all of their lost ground to end flat as traders took some support with report that the Organization for Economic Co-operation and Development (OECD) has raised prospects of India’s economy by pegging contraction at 9.9 per cent, against 10.2 per cent it projected in September. Markets participants also took note of report that the gross Goods and Services Tax (GST) collection for November stood at Rs 1.04 lakh crore, 1.4 percent higher than the sum collected in the same month last year. Some relief also came with report that the Reserve Bank of India monetary policy committee is expected to leave interest rates unchanged when it meets on Friday, after data showing the economy contracting less than expected and persistently high inflation.

Global cues too remained sluggish with European counters making mostly red start. Asian markets ended mixed on Wednesday, after consumer prices in South Korea were up 0.6 percent on year in November. The Statistics Korea said that missed forecasts for an increase of 0.9 percent but was up from 0.1 percent in the previous month. On a monthly basis, inflation eased 0.1 percent - again shy of expectations for an increase of 0.2 percent but improving from the 0.6 percent contraction in October. Core CPI, which excludes volatile food costs, gained an annual 0.6 percent after slipping 0.3 percent a month earlier.

Back home, Indicating the beliefs of investors in the strength and resilience of Indian economy, the country’s growth story continues to expand with increasing foreign portfolio investment (FPI), foreign direct investment (FDI) and Corporate Bond Market flows. On the sectoral front, insurance sector’s stocks remained in focus as latest data by the General Insurance Council (GIC) showed that foreign direct investment (FDI) in the general insurance sector slipped marginally to Rs 509.07 crore in FY 2019-20 from the previous year. Oil marketing companies BPCL, HPCL and IOC climbed as they hiked the prices of petrol and diesel after a pause of 2 days.

Finally, the BSE Sensex slipped 37.40 points or 0.08% to 44,618.04, however the CNX Nifty was up by 4.70 points or 0.04% to 13,113.75.

The BSE Sensex touched high and low of 44,729.64 and 44,169.97, respectively and there were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.55%, while Small cap index was up by 0.68%.

The top gaining sectoral indices on the BSE were Realty up by 3.05%, Metal up by 2.55%, Consumer Durables up by 2.00%, Oil & Gas up by 1.71% and Utilities up by 1.59%, while Bankex down by 1.29% was the lone losing index on the BSE.

The top gainers on the Sensex were ONGC up by 4.11%, Asian Paints up by 3.74%, Titan Company up by 3.48%, Tata Steel up by 3.19% and Bajaj Auto up by 2.60%. On the flip side, Kotak Mahindra Bank down by 3.28%, HDFC Bank down by 1.86%, HDFC down by 1.28%, ICICI Bank down by 0.99% and Nestle down by 0.87% were the top losers.

Meanwhile, the Organization for Economic Co-operation and Development (OECD) has raised prospects of India’s economy by pegging contraction at 9.9%, against 10.2% it projected in September for the current financial year (FY21).

It forecasted that the economy would rebound to 8% in the next fiscal year and 5% a year later, but gross domestic product (GDP) loss would be substantial. With fiscal deficit at around 16% of GDP, it expected the Union Budget for 2021-22 (FY22) to be cautious on stimulus. However, it called for more fiscal measures to mitigate the hardships arising from Covid-19.

It saw limited scope of further easing of monetary stance by the Reserve Bank of India (RBI) due to high inflation, but expected further cut in the policy rate around the turn of the current fiscal year due to easing of supply of food items. Besides, it said the world economy will bounce back to pre-pandemic levels by the end of 2021, even as it warned that recovery will be uneven across the countries and risks remain.

The CNX Nifty traded in a range of 12,983.55 and 13,128.50 and there were 36 stocks advancing against 13 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were GAIL India up by 4.88%, ONGC up by 3.80%, Asian Paints up by 3.76%, Coal India up by 3.48% and Titan Company up by 3.37%. On the flip side, Kotak Mahindra Bank down by 3.35%, HDFC Bank down by 1.95%, HDFC down by 1.43%, Shree Cement down by 1.24% and ICICI Bank down by 1.16% were the top losers.

European markets were trading mostly in red, France’s CAC declined 14.01 points or 0.25% to 5,567.63 and Germany’s DAX was down by 44.41 points or 0.33% to 13,337.89, while UK’s FTSE 100 increased 8.54 points or 0.13% to 6,393.27.

Asian markets ended mixed on Wednesday as investors booked profits after record November, while optimism surrounding Covid-19 vaccines after the European Medicines Agency said it received applications for emergency approval of vaccines developed by Pfizer with BioNTech and Moderna kept market sentiment well supported. Also helping sentiment, a bipartisan group of US legislators unveiled a $908 billion Covid-19 relief bill on Tuesday. Japanese shares ended almost flat despite hopes for economic recovery if vaccines are rolled out fast.


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