 "Image via Shutterstock")
Benchmark indices pared all losses to settle on a higher note in today’s session after two sessions of fall ahead of RBI policy meet. Polls suggesting RBI may cut the rate by 25 bps affected the sentiment.
Globally, the sentiment was affected after Italian PM Matteo Renzi resigned following heavy defeat on constitutional referendum, raising political uncertainty in the euro zone.
Swinging between gains and losses, Sensex fell as much as 105 points at intra-day and rose 160 points in the afternoon trade led by gains in telecom, auto and metal sector indices. While broader Nifty50 fell to a intra-day low of 8,056 but later pared losses to reach a high of 8,142 level.
Also Read
The S&P BSE Sensex settled at 26,349, up 118 points, while the broader Nifty50 ended at 8,129, up 42 points. Among broader markets, BSE Midcap was up 0.66% while BSE Smallcap gained 0.26%.
"With rate cut expectations running high ahead of RBI meet this week, risk appetite improved especially in rate sensitive stocks forcing short covering. Sentiments were also helped by European markets swing higher after Italian referendum. Expectations of populist measures aimed at softening demonetisation worries are also allowing markets to be forward looking now," said Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services.
Stocks and Sectors
Financial stocks pared losses after falling almost 2% at intra-day but settled in green. Housing Development Finance Corp Ltd shed up to 4.34% but ended 1.87% down. The stock was the biggest loser on BSE Sensex.
Other losers included TCS (1.45%), GAIL (0.89%) and Sun Pharma (0.78%).
The Nifty IT index dropped 0.89% and ended lower for a third straight session. MindTree and Tech Mahindra led the losses, with a fall of more than 2% each.
Meanwhile, auto sector index was the top sectoral gainer in both the headline indices. MRF (3.76%) and Ashok Leyland (3.55%) led the gains on BSE Sensex while M&M (3.42%), Maruti (2.72%), Tata Motors (1.28%) and Bajaj Auto (1.98%) also pulled the index.
Other gainers at BSE Sensex included Asian Paints (3.36%), Lupin (3.18%), Bharti Airtel (2.65%) and Tata Steel (1.82%).
Among other stocks, Crompton Greaves settled 8.94% lower at Rs 69.30 on the BSE on back of heavy volumes after the company said that it has agreed to extend the Long Stop Date of the Share Purchase Agreement (SPA) with Pauwels Spaco to December 6, 2016. The stock hit an intra-day low of Rs 68.50 on the BSE.
Procter and Gamble Hygiene and HealthCare Ltd (P&G) ended 2.40% higher at Rs 6,775 on the BSE after the company reported a 50% year on year (YoY) jump in net profit at Rs 103.72 crore for the quarter ended September 30, 2016 (Q1), helped by higher volume growth. The stock reported intra-day high of Rs 6,899.
Services PMI fell for the first time since June 2015
Hit hard by cash shortage, services sector contracted in November - that too at sharpest rate in three years - as new orders fell for the first time since June 2015 though subdued inflationary pressure opened up room for RBI to lower rates, a monthly survey showed today.
The Nikkei India Services Purchasing Managers' Index (PMI), which tracks services sector companies on a monthly basis, stood at 46.7 in November, down from 54.5 in October. A reading above 50 means the sector is expanding while a score below this mark signals contraction.
The index has registered a contraction for the first time since June 2015.
The Nikkei India Composite PMI Output Index also dropped to 49.1 in November from October's 45-month high of 55.4, pointing to a contraction in entire private sector activity, including the manufacturing sector.
"The latest set of gloomy PMI figures for the Indian service sector shows that companies were heavily impacted by the ban on Rs 500 and 1,000 notes. The cash shortage resulted in fewer new business intakes, which in turn caused a fall in activity and ended a 16-month sequence of expansion," said Pollyanna De Lima, IHS Markit economist and author of the report.
RBI may cut rate by 25 basis points
Two out of the 12 economists, bond market dealers and rating agency officials polled by Business Standard say RBI will go for at least a 25 basis-point cut.
The economic slowdown due to demonetisation is expected to shave off a percentage point from the gross domestic product growth and so a rate cut at this point to encourage private-sector loan off-take and spending will be needed. However, the US Federal Reserve is highly likely to increase its policy rate in mid-December. If that happens, the interest rate differential between India and the US will narrow, making it unattractive for investors to put in money here.
Global Markets
European shares edged lower on Thursday in a broad-based sell-off, halting a two-day rally and retreating from the previous session's three-week highs, led lower by drops in TalkTalk and Elekta.
The STOXX 600 was down 0.6% by 0938 GMT, having climbed to its highest level since November 10 in the previous session.
Almost every sector was in negative territory. The exceptions were in the commodity space after oil-producing countries came to a deal to limit oil output.
Renzi's failure deals a body blow to a European Union already reeling under anti-establishment anger that led to the shock exit of the UK from the club in June.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4%, while E-mini futures for the S&P 500 narrowed losses to 0.3%. Japan's Nikkei slid 0.9%.
