Markets close at fresh highs after trade deficit narrows

Indian shares surged in late trade following the release of robust trade deficit numbers, which reiterated the view that India's dangerous tryst last year with high external deficits is behind, and, corroborated by recent macro data, that an economic recovery should be under way.

At close, the Sensex jumped 0.47 percent, or 131 points, to 28,177 points while the 50-share Nifty gained 0.49 percent, or 41 points, to 8,430.

Earlier, stocks traded with a marginal negative bias, tracking Asian peers, after a surprise quarterly contraction in Japan's GDP - the second in a row - plunged it into a recession.

But in afternoon trade, India's October trade deficit data narrowed to USD 13.36 billion (from 14.25 billion month-on-month) led by a decline in oil imports.

The fall in overall imports was also accompanied by a less-than-proportionate fall in exports, which hit a seven-month low, but experts CNBC-TV18 spoke to said a low base effect would kick in from January onward, and push exports into the positive zone.

Broad-based move
Barring so-called defensive sectors IT and pharmaceuticals, the up-move was broad-based, with metals, oil & gas, capital goods, banks, cement and telecom all rising more than 2 percent on average.

Key movers in the frontline indices were SBI and Tata Motors, up 5.4 percent and 4.1 percent, respectively, following their earnings declaration Friday.

SBI's move had a positive rub-off on other public sector banks, with Bank of Baroda (4.2 percent) and Punjab National Bank (2.74 percent) rising too.

The results season, which ended Friday, impacted many stocks in trade today but even a broad consensus that revenue growth was dismal was not enough to deter stocks from making fresh highs.

''We started of with the macro repair in a sense with the top-down beginning to trough out and starting to get better and with a lag,'' Anup Maheshwari of DSP BlackRock told CNBC-TV18 in an interview .

''We are hoping that corporate earnings will also start picking up. It is not fully evidenced at the moment yet has we have seen from this quarter as well. However the general assumption and the same assumption that we are working with is that we will start seeing this come through in financial year 2016,'' he added.

Mid- and small-cap stocks outperformed their larger cap peers, with a 0.9 percent and 1.1 percent move overall.

Within mid and small caps, several stocks hit upper circuit filters: Patel Integrated Logistics, Hind Rectifiers, Phillips Carbon, Hindustan Media Ventures and Cantabil Retail, among others, were all locked with a 20 percent gain.

Shares of logistics firms continued their robust run, with Snowman Logistics and Allcargo vaulting 15.3 percent and 13.5 percent, respectively.

Over the past one year, logistics shares such as Allcargo, Transport Corp and Patel Integrated have gained between 250 percent and 750 percent, as hopes increased economic activity and a surge in ecommerce would lead to more business for logistics firms.

Other asset classes
In other asset classes, gold slipped lower, falling 0.67 percent to Rs 26,650, a day after it clocking its single biggest gain.

The rupee strengthened marginally against the US dollar while the yield on the benchmark 10-year bond fell 8.18 percent after Goldman Sachs said it expects the Reserve Bank of India to cut rates by 50 basis points by next June, thanks to the recent fall in inflation.

3:30 pm: After trading mostly weak, Indian shares made a sizzling comeback in late trade today, as investors took cues from positive trade balance data that reiterated the view that the Indian economy is slowly coming back on track.

Early on, both the Sensex and the Nifty trading marginally below the dotted line but surged later to log fresh all-time highs.

At close, the Sensex jumped 0.47 percent, or 131 points, to 28,177 points while the 50-share Nifty gained 0.49 percent, or 41 points, to 8,430.

The late move, while it was led by auto and public-sector banks, was broad-based with telecom, services, chemicals and utility shares all rising over 1 percent.

3:00 pm: The Indian market appeared headed towards a new record closing after shares made up for early losses in a late surge following the release of positive trade balance data.

Investors lapped up shares in public sector banks (up 5.3 percent) - after State Bank of India declared a robust set of numbers Friday - and in autos. Other sectors, barring metals and pharmaceuticals, too closed in the green.

Shares got a boost after India's trade balance data came in better than expected, giving investors confidence the country's tryst with ballooning external deficits it witnessed last year was now firmly behind.

Sensex is up 0.48 percent, or 134 points, to 28,181 while Nifty has gained 0.5 percent, or 41 points, to 8,430.

Among the major movers through the day were several companies which declared earnings on Friday evening or over the weekend: such as SpiceJet (down 9.5 percent) and Tata Motors (up 4.1 percent).

The investor interest in public sector is justified, according to DSP BlackRock's Anup Maheshwari, who added his funds were overweight on financials. ''Interest rates will fall if the disinflationary trend maintains and this will help bank stocks,'' according to the fund manager.

''There is a consistent repair cycle going on in India,'' Maheshwari said, adding that the change in the RBI (with the taking over of Raghuram Rajan), the government (with the Modi-led dispensation) and the fall in crude prices bode well for the Indian economy.

2:30 pm: Indian shares zoomed back above the flat line to make fresh all-time highs after a larger-than-expected fall in India's trade deficit for October, coming in at USD 13.36 billion (versus 14.25 billion month-on-month).

At the time of writing, Sensex was up 0.5 percent, or 132 points to 28,178 while Nifty too climbed 0.4 percent, or 32 points, to 8,422.

Part of the decline in the trade deficit was led by a decline in oil imports (presumably due to falling prices).

Early, markets treaded water for most part of the day, following weakness in Asian shares.

Most sectors barring IT and pharma are now firmly in the green. (Check out sector movements here ).

Several stocks, which were down earlier, have now cllimbed back up. A news-driven stock that has caught our eye is India Cements, now up 3.8 percent, after chief N Srinivasan (also BCCI president-in-exile) was given a clean chit by Supreme Court in the IPL spot fixing case today.

2:00 pm: Indian equities gave up early losses to trade close to flat.

At the time of writing, the Sensex is trading practically flat at 28,039, close to where it closed Friday while the Nifty is down a meager 0.08 percent, or 6.7 points, to 8383.

In sector movers, public sector banks are leading the move, thanks to a sterling 4.1 percent jump in SBI. Autos, too, are witnessing buying while IT and pharma stocks are in the red.

Early on, Indian shares followed their Asian peers down after a surprise contraction in GDP plunged Japan into recession.

Market experts also attributed the consolidation to a pause after the scorching rally Indian markets have witnessed recently (the Sensex closed at all-time highs on Friday) amid some concerns on valuations.

But the rally may continue and the market may make fresh highs soon, according to Religare Capital CMD Gautam Trivedi, given that FIIs were continuing to buy.

In an interview with CNBC-TV18, Trivedi said : ''FIIs continue to dominate the market and based on where they are physically sitting, they find India the most attractive among all the emerging markets and hence money flow will continue and with the Winter Session [of the Parliament] the market could potentially break new highs.''

At a recent conference in New Delhi, Finance Minister Arun Jaitley had pledged that the government would initiate slew of economic reforms in the Winter Session, including push to make changes in the Land Acquisition Act as well as formalize its move to increase FDI cap in sectors such as insurance.

1:30 pm: Indices continue to struggle for direction in afternoon trade. The Sensex is down 55 points at 27991 and the Nifty down 21 points to 8368.

Brokers say concerns about high valuations is holding investors back from buying aggressively at higher levels. Midcap and small caps are faring better than their large cap counterparts at this point. Phillips Carbon Black, Patel Integrated Logistics, Sudarshan Chemicals and HMVL are among the big gainers of the day, up 20 percent with trading in these stocks being frozen for want of sellers.

Overall, the mood continues to remain positive, but investors seem to be waiting for some activity at the ground level before committing money.

"The focus on fiscal consolidation, the ease of doing business and diesel price deregulation are significant medium-term positives, in our view. We expect the policy momentum to remain favorable and expect further developments on GST, the land acquisition bill and increased FDI in the insurance sector to further aid the growth revival," says a note by JP Morgan.

One of the worries for the market is that the earnings revival seems to be some way off. Kotak Securities is of the view it could take another 2-4 quarters.

1:00 pm: Indian markets are trading marginally lower, tracking cues from their Asian peers, after it emerged Japan had plunged into a recession following two straight quarterly declines in GDP.

At the time of writing, the BSE Sensex has down 0.22 percent, or 62 points, to 27,985 points while the NSE Nifty is off 0.27 percent, or 22.5 points, to 8,368.

Most sectors, barring oil & gas and autos are trading in the red.

Here are some stocks that are buzzing in afternoon trade.

• JSW Energy (up 12.1 percent) and JP Power (up 3.2 percent) have gained on the back of news JSW has agreed to acquire 100 percent stake in JP's Himachal Baspa Power Company.
• SpiceJet has slumped 8.2 percent following another quarter of heavy losses even as management says it is confident of making the carrier profitable next year.
• Tata Motors is up 3.1 percent after it posted decent set of earnings Friday, driven largely by its British subsidiary JLR.
• While SBI is at a three-year high after the bank posted impressive set of numbers Friday, with asset quality being seen as stable.

In Asia, the Nikkei closed about 3 percent down, while the Hang Seng and Shanghai Composite lost 1 percent and 0.2 percent in late trading.

We wrap up this update with a Marketwatch piece on the global bull market under way since 2009, that reads thus:

''The long rally has done wonders for my portfolio's value. But it also means stocks are now more richly valued-and expected returns are lower. Unless you never again plan to add to your stock portfolio, you should have mixed feelings about the market's heady gains.''

12:30 pm: While most sectors in the frontline indices witness selling pressure, public-sector stocks have put on a robust show, led by heavyweight State Bank of India, which is up over 4 percent to Rs 2,902 at the time of writing.

SBI's private sector peers, though, are particularly weak. ICICI Bank and HDFC Bank are down 1.8 percent and 1.5 percent, respectively.

Here's the Moneycontrol Market Map that shows sector-wise movements.

12:00 pm: Indian shares continued to trade marginally below the flat line. In afternoon trade, Sensex is down 0.31 percent, or 89 points to 27,958 points while Nifty is off 0.35 percent, or 29 points to 8,360.

Equities have been trading weak globally, with Asian peers such as the Singapore index and the Hang Seng losing 0.3 percent and 0.6 percent, respectively.

The Japanese Nikkei has slumped nearly 3 percent after Japan's economy was surprisingly shown shrinking 1.6 percent in the third quarter (the second straight quarterly decline), according to government data released today. Economists attributed the decline to the imposition of a sales tax that was increased recently.

This comes amid news reports Japanese PM Shinzo Abe may announce snap elections, which threaten to derail the 'Abenomics' experiment the premier has unveiled over the past few years.

Meanwhile, several stocks, which declared earnings numbers late last week, have reacted to earnings. Catch an interesting Business Standard update on the results season.

11:30 am: Among others, four stocks that reported numbers Friday and over the weekend are SpiceJet (down 9.1 percent), BEML (off 3.6 percent), Reliance Capital (up 1.75 percent) and Shipping Corporation of India (up 1 percent).

Catch the interview with managements of Spice , BEML , Rel Cap and SCI here as they make sense of the quarter gone by.

SpiceJet has particularly taken it up on its chin, amid fifth straight quarterly losses but COO Sanjiv Kapoor told CNBC-TV18 that the debt-stricken airliner aims to make it to black by 2015.

11:00 am: The downward market trend is now firmly ensconced. The Sensex is now down 0.31 percent, or 89 points to 27,957 while the Nifty is down 0.37 percent, or 31 points to 8,358. The market breadth has now worsened with a 15:35 advance-decline ratio for the Nifty 50 stocks.

Mid- and small-caps are, however, holding up, with a gain of 0.34 percent and 0.6 percent, respectively.

On a sectoral basis, most sectors barring telecom and auto are in the red. Private banks are witnessing selling: the HDFC twins have lost 1.7 percent each while ICICI is down 1 percent.

10:15 am: In other key asset classes:

• Rupee trades at 61.71 down 1 paisa, and close to a one-month low
• Gold, which jumped 2.5 percent in a single day Saturday , is trading with a mildly negative trend: down Rs 79 to Rs 26,387.
• While crude oil, a key determinant of the fortune of the Indian economy, keeps up with its recent trend, trades slightly lower.

10:00 am: Here's some food for thought. After being net buyers for through October of Rs 4,102 crore, domestic institutional investors (such as mutual funds) have been net sellers every single trading day till now this month, net-selling about Rs 5,227 crore. FIIs, predictably, have been net buyers, purchasing stocks about Rs 7,590 crore.

Does this mean retail investors, who were finally showing signs of coming back into the markets, have again turned their backs? 

9:45 am: Looking back at the earnings quarter gone by, an analysis of 2,432 companies shows profits grew about 42 percent (fastest in at least three years) but sales growth slowed to 5.9 percent, the slowest in five quarters, according to a Business Standard  article.

This likely means companies have resorted to cutting costs in order to boost profits.

''Profits were below our estimates,'' Kotak wrote in a note to clients this morning. ''Underlying trends are still weak but stable. Investment recovery is still two-four quarters away,'' it says, adding valuations are fair on FY2016 basis. ''There is 20 percent upside in the markets if all goes well.''

9:30 am: The fall early is broad-based with both high-beta sectors (banks, metals, capital goods) as well as defensives (IT and pharma) off 0.1 to 0.3 percent. Oil & gas, led by ONGC and Reliance, is holding up.

9:20 am: BSE Sensex is down 48.5 points (0.17 percent) to 27,998 while the NSE Nifty is off 17 points (0.21 percent) to 8,372.

9:15 am: STOCKS START TRADE ON A FLAT NOTE.

9:10 am: Among key stocks that will remain in news are several that reported quarterly earnings on Friday and on the weekend, such as SBI, Punj Lloyd, Britannia, Reliance Communications and SpiceJet.

HDIL is in news early morning after a key project in Mumbai, Planet HDIL, got the environment ministry nod.

9:00 am: Welcome to live coverage for the Indian markets for today. Shares have opened without any firm direction in pre-market trading, with the benchmark indexes bobbing above and below the flat line. Catch live updates here.