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Benchmarks hit day's highs; FMCG shares in demand

Key indices extended initial gains and hit fresh intraday high in morning trade. The Nifty regained the 11,950 level. At 10:23 IST, the barometer index, the S&P BSE Sensex, was up 162.48 points or 0.40% at 40,756.28. The Nifty 50 index added 42.55 points or 0.36% at 11,973.50.

Gains were capped as India's retail inflation in September rose above the RBI's comfort level, while industrial output continued to contract in August, official data showed on Monday. The RBI MPC has given the mandate to maintain annual inflation at 4% until 31 March 2021, with an upper tolerance of 6% and a lower tolerance of 2%.

In the broader market, the S&P BSE Mid-Cap index shed 0.07% while the S&P BSE Small-Cap index added 0.08%.

The market breadth was positive. On the BSE, 1063 shares rose and 970 shares fell. A total of 133 shares were unchanged.

Economy:

India's industrial output contracted for the sixth straight month in August, due to lower output of manufacturing, mining and power generation sectors. Data released on Index of Industrial Production (IIP) by the Ministry of Statistics & Programme Implementation on Monday showed the index had contracted 8% in August compared with a fall 10.77% in July. The data further showed that, manufacturing sector production had registered a decline of 8.6%, while the output of mining and power segments fell 9.8% and 1.8%, respectively.

India's retail inflation jumped to its highest in eight months in September on the back of rising food prices. The Consumer Price Index-based inflation stood at 7.34% last month compared with 6.69% in August. Inflation in the food and beverages category stood at 9.73% in September against 8.29% in August, led by higher prices of vegetables, pulses, meat and fish.

Meanwhile, the GST Council on Monday failed to reach any consensus for the second time in a week over compensating states for shortfall in GST collections. The meeting, chaired by finance minister Nirmala Sitharaman, was a continuation of the 42nd GST Council meet held last week.

Addressing the media after the meeting, Nirmala Sitharaman said that the Centre cannot borrow and pay states for the shortfall, it is the States that need to borrow since it would lead to rise in bond yields, resulting in rise in borrowing costs for the government and the private sector.

Coronavirus Update:

India reported 838,729 active cases of COVID-19 infection and 109,856 deaths while 6,227,295 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India. Total COVID-19 confirmed cases worldwide stood at 37,745,942 with 1,079,963 deaths, according to data from Johns Hopkins University.

Buzzing Index:

The Nifty FMCG index rose 0.66% to 30,223.30. The index has added 1% in two sessions.

Godrej Consumer (up 2.09%), Varun Beverages (up 1.70%), Dabur India (up 1.39%), Marico (up 1.35%), Britannia Industries (up 1.17%), Colgate-Palmolive India (up 0.83%), Jubilant Foodworks (up 0.78%) and ITC (up 0.64%) advanced.

United Breweries (down 1.61%), United Spirits (down 0.31%) and Emami (down 0.19%) declined.

Stocks in news:

SRF slipped 0.37% to Rs 4352.60. The specialty chemicals maker launched a qualified institutional placement (QIP) of shares on Monday (12 October 2020). The floor price has been set at Rs 4168.73 per equity share for the QIP, which is at a 4.58% discount to Monday's closing price of Rs 4368.85 per share.

In its draft placement document filed with the bourses, SRF said: "Our company proposes to utilize the net proceeds for funding suitable organic and inorganic growth opportunities, ongoing capital expenditure, other long term and short terms requirements, pre-payment and/or repayment of outstanding borrowings, general corporate purpose, or any other purposes, as may be permissible under applicable law and approved by our board or its duly constituted committee."

Cipla rose 0.77% to Rs 821. The drug major said that its step-down US-based subsidiary received complete response letter (CRL) from the US drug regulator for IV Trambol. The CRL stated that the application for IV tramadol cannot be approved in its present form. The drug, intended to treat patients in acute pain who require an opioid, is not safe for the intended patient population. The USFDA requires an adequate terminal sterilization validation prior to NDA approval, which is planned for later this quarter.

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