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Benchmarks trade marginally lower in early deals
Jan-18-2019

Indian equity benchmarks are trading slightly in red as traders failed to get relief with India Ratings and Research’s report that the country’s economy is likely to grow a tad higher at 7.5 per cent in 2019-20 on account of steady improvement in major sectors -- industry and services. It further said Gross Domestic Product (GDP) growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the US dollar, among other factors. Traders also failed to get any solace with report that ahead of the monetary policy review, India Inc has urged the Reserve Bank of India (RBI) to cut interest rate and reserve ratio to prop up growth. Industry chambers suggested various measures to ease tight liquidity situation and reduce high cost of credit in the light of consistently falling inflation.

On the global front, Asian markets are trading mostly in green at this point of time, as hopes for a thaw in the US-China trade conflict fed investor appetites for risk assets. The US markets extended their gains for third straight session on Thursday on optimism the US would ratchet back tariffs on Chinese imports, a conflict that has rattled financial markets in recent months.

Back home, agriculture related stocks remained in focus with report that farmers could get annual income support of Rs 15,000 per hectare if the Niti Aayog’s proposal for an upfront subsidy through direct benefit transfer is accepted. The Aayog has suggested that all subsidies for agriculture, including fertiliser, electricity, crop insurance, irrigation and interest subvention be replaced by income transfer. Stocks related to rubber industry remained buzzing with Union minister for commerce and Industry and Civil Aviation Suresh Prabhu’s statement that the government is developing a National Rubber Policy to address various issues concerning the sector.

The BSE Sensex is currently trading at 36322.42, down by 51.66 points or 0.14% after trading in a range of 36282.42 and 36469.98. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.19%, while Small cap index was down by 0.19%.

The top gaining sectoral indices on the BSE were Metal up by 0.59%, Energy up by 0.45%, Power up by 0.37%, Oil & Gas up by 0.18% and Utilities up by 0.16%, while Healthcare down by 1.81%, Telecom down by 0.87%, TECK down by 0.19%, Industrials down by 0.18% and Capital Goods was down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.24%, Vedanta up by 1.04%, Power Grid Corporation up by 1.03%, Tata Steel up by 0.95% and Reliance Industries up by 0.67%. On the flip side, Sun Pharma down by 10.41%, Bharti Airtel down by 2.23%, Yes Bank down by 1.56%, Coal India down by 0.78% and Axis Bank down by 0.67% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra), a Fitch Group company, in its latest report has stated that India’s Gross Domestic Product (GDP) growth is likely to grow a tad higher at 7.5% in 2019-20 (FY20) on account of steady improvement in major sectors -- industry and services. After demonetisation and Goods and Services Tax (GST), the agency had expected 2018-19 to be a year of quick recovery and, indeed, the recovery has been sharp with GDP growth coming in at 7.2%.

The rating agency further said GDP growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the US dollar, among other factors. However, GDP growth in 2019-20 will be more dispersed and evenly balanced across sectors as well as demand-side growth drivers.

Over the past few years, private final consumption expenditure and government final consumption expenditure have been the primary growth drivers of Indian economic growth. Ind-Ra believes that investments are slowly but steadily gaining traction, with gross fixed capital formation growing 12.2% in the current fiscal and projected to clock 10.3% in the next year.

Ind-Ra added that this is certainly a comforting development, but the flip side of this development is that it is primarily driven by the government capex (capital expenditure), as incremental private corporate capex has yet to revive. It further said that due to the slowdown in private corporate and household capex, GDP growth has failed to accelerate and sustain itself close to or in excess of 8%.

The CNX Nifty is currently trading at 10890.80, down by 14.40 points or 0.13% after trading in a range of 10873.15 and 10928.20. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.45%, Power Grid Corporation up by 1.29%, Vedanta up by 1.11%, Tech Mahindra up by 0.87% and JSW Steel up by 0.83%. On the flip side, Sun Pharma down by 10.12%, Bharti Airtel down by 2.26%, GAIL India down by 1.91%, Yes Bank down by 1.51% and Ultratech Cement down by 0.90% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 269.73 points or 1.32% to 20,672.00, Straits Times gained 8.21 points or 0.26% to 3,222.65, Hang Seng jumped 257.57 points or 0.96% to 27,013.20, Taiwan Weighted rose 40.63 points or 0.42% to 9,829.78, KOSPI advanced 11.06 points or 0.52% to 2,118.12 and Shanghai Composite was up by 20.12 points or 0.79% to 2,579.76. On the flip side, Jakarta Composite was down by 3.67 points or 0.06% to 6,420.11.
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