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Published on 26/11/2020 5:55:21 PM | Source: LKP Securities Ltd

Indian markets end higher in volatile trade - LKP Securities

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

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Indian markets end higher in volatile trade

In an extremely volatile trading session, Indian equity benchmarks staged a recovery, recouping previous losses, to end the day higher on Thursday, led by robust gains in Metal, Basic Materials, Finance and Telecom stocks amid largely positive cues from global markets. The benchmarks staged a positive opening but soon slipped into red terrain in morning deals, owing to expiry of November future and option contracts. Investors’ sentiment remain dented with the 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks (SCBs), September 2020' - released by the Reserve Bank of India (RBI) has indicated that bank credit growth decelerated to 5.8 percent in Q2 (July- September) of FY21 from 8.9 percent in the year-ago period. It also said aggregate deposits of banks rose 11 percent year-on-year in the July-September period as compared to 10.1 percent growth a year ago. Traders also took a note of report that the Finance Ministry has asked ministries and departments to restrict their expenditure for the remaining months of the current fiscal as per the Revised Estimates (RE) target, amid moderating revenues due to the COVID-19 crisis.

However, market indices reversed trend and closed majorly positive, as some optimism remained among traders with a private report stating that the Indian economy is likely to have improved in the second quarter with GDP printing in at -7.8 percent as against 24 percent contraction in the June quarter. Traders took note of report that in a bid to push infrastructure creation in the country, the Union Cabinet has approved Rs.6000 crore capital infusion in National Investment and Infrastructure Fund's (NIIF) debt platform over the next two years. Separately, IT industry body Nasscom said that Indian tech start-ups are witnessing a gradual recovery with revenue acceleration and funding improving their cash availability and giving them longer runway to operate. Nasscom had conducted a 'Start-up Pulse Survey II' to understand what has changed and what the next six months look like for the tech start-up ecosystem in the country. The first survey was conducted in April-May this year.

On the global front, Asian markets ended mostly in green, on optimism over a third potential vaccine and signs that the coronavirus infection rate has ‘slowed down’ in Europe. Besides, the Bank of Korea retained its interest rate at a record low and lifted its growth outlook, saying imports will improve gradually with global recovery. European markets were trading lower, as survey results from the market research group GfK showed German consumer sentiment deteriorated notably due to the partial lockdown. The forward-looking consumer sentiment index fell to -6.7 in December from revised -3.2 in October. The expected reading was -5.0. Back home, on the sectoral front, Metal stocks were in focus with World Steel Association (worldsteel) report that India's crude steel output increased marginally by 0.9 per cent to 9.058 million tonne (MT) in October 2020. There was some reaction in real estate sector stocks as a recent CRISIL report on the real estate sector has said that new home sales have seen a surprise surge in the last couple of months bringing it back to pre-pandemic levels in key markets.

Finally, the BSE Sensex rose 431.64 points or 0.98% to 44,259.74, while the CNX Nifty was up by 128.60 points or 1.00% to 12,987.00.

The BSE Sensex touched high and low of 44,361.78 and 43,582.40, respectively and there were 25 stocks advancing against 5 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.94%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Metal up by 4.13%, Basic Materials up by 2.18%, Finance up by 1.47%, Telecom up by 1.26% and Healthcare up by 1.19% while, Oil & Gas down by 0.23% was the lone losing index on BSE.

The top gainers on the Sensex were Tata Steel up by 5.16%, Bajaj Finance up by 2.95%, Bajaj Auto up by 2.60%, HDFC up by 2.20% and HCL Technologies up by 2.16%. On the flip side, Maruti Suzuki down by 0.87%, ONGC down by 0.74%, Indusind Bank down by 0.47%, Tech Mahindra down by 0.45% and Infosys down by 0.23% were the top losers.

Meanwhile, the 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks (SCBs), September 2020' - released by the Reserve Bank of India (RBI) has indicated that bank credit growth decelerated to 5.8 percent in Q2 (July- September) of FY21 from 8.9 percent in the year-ago period. It also said aggregate deposits of banks rose 11 percent year-on-year in the July-September period as compared to 10.1 percent growth a year ago.

According to the data, the deceleration in bank credit growth was seen across all the population groups – rural (11.2 percent vs 14.8 percent), semi-urban (9.4 percent vs 12.3 percent), urban (8.7 percent vs 9.9 percent) and metropolitan (3.6 percent vs 7.2 percent). Annual growth (y-o-y) in credit by private sector banks moderated significantly to 6.9 percent in September 2020 from 14.4 percent a year ago, whereas it increased marginally for public sector banks to 5.7 percent from 5.2 percent over the same period last year.

Data further showed that the share of current account and saving account (CASA) in total deposits has been gradually increasing. It stood at 42.3 percent in September 2020 compared to 41.2 percent a year ago and 40.8 percent three years ago. As deposit growth exceeded credit growth, the all-India credit-deposit (C-D) ratio declined to 72 percent in September 2020 from 73.1 percent in the previous quarter.

The CNX Nifty traded in a range of 13,018.00 and 12,790.40 and there were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 7.02%, Tata Steel up by 5.20%, Grasim Industries up by 4.38%, Bajaj Finance up by 3.42% and Shree Cement up by 3.27%. On the flip side, Eicher Motors down by 1.57%, Maruti Suzuki down by 0.73%, BPCL down by 0.67%, HDFC Life Insurance down by 0.65% and ONGC down by 0.62% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 35.51 points or 0.56% to 6,355.58, France’s CAC fell 8.09 points or 0.15% to 5,563.20 and Germany’s DAX was down by 0.94 points or 0.01% to 13,288.86.

Asian markets ended mostly higher on Thursday due to optimism over a third potential vaccine by AstraZeneca and the University of Oxford that was found to be highly effective in preventing Covid-19. Market sentiment was also encouraged by signs that the transition of power in the US to President-elect Joe Biden has begun. Japanese shares climbed as the government maintained its assessment of the economy in November, saying that conditions remain severe due to the novel corona virus but it is showing movements of picking up. Though, surprise uptick in US jobless claims amid fresh Covid-19 lockdowns has restricted some gains. The US Labor Department said 778,000 initial claims were filed in the week ended November 25, more than expected and an increase of 30,000 from the previous week's upwardly revised figure.

 

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