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EQUITY
Post Session: Quick Review
May-22-2019

Indian equity benchmarks ended volatile day of trade in green terrain on Wednesday, on the back of buying by participants. Markets started off with marginal gains, as traders took some comfort with the Organisation for Economic Co-operation and Development (OECD) in its Economic Outlook stating that India’s economic growth will regain strength and approach 7.5% by 2020 buoyed by rural consumption and subdued inflation. It added that this growth will come from higher domestic demand due to improved financial conditions, fiscal and quasi-fiscal stimulus, including new income support measures for rural farmers, and recent structural reforms. Buying further crept in with the private report that land and labour reforms, privatisation and export promotion would be at the top of agenda of the new government irrespective of which party or coalition takes charge after the poll results on May 23.

Key indices extended their upside in the second half of the day, amid United Nations’ (UN) report stated that the India's economy is projected to grow at 7.1% in current financial year (FY20) on the back of strong domestic consumption and investment. It projected the economy will grow 7% in last financial year (FY19). But, markets gave up most of their gains to come off their intraday high points in late trade, as traders remained on sidelines ahead of final results of the 2019 Lok Sabha elections to be declared on May 23.

On the global front, Asian markets ended mostly lower on Wednesday, as trade tensions continued to linger between the U.S. and China. European markets were trading in green, as investors monitor the increasing involvement of technology giants in the U.S.-China trade war. Back home, steel sector stocks ended in red with rating agency India Ratings (Ind-Ra) in its latest report cautioning that steel production in India may be significantly affected if the auction of the mines is delayed. Consequently, it said the credit profile of merchant miners and thus non-integrated steel players could come under stress.

The BSE Sensex ended at 39133.26, up by 163.46 points or 0.42% after trading in a range of 38903.87 and 39249.08. There were 25 stocks advancing against 6 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index fell 0.14%, while Small cap index was up by 0.56%. (Provisional)

The top gaining sectoral indices on the BSE were Bankex up by 0.99%, PSU up by 0.89%, Capital Goods up by 0.87%, Industrials up by 0.85% and Oil & Gas up by 0.65%, while FMCG down by 0.73%, Consumer Durables down by 0.67%, IT down by 0.52% and TECK down by 0.47% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Indusind Bank up by 5.39%, Sun Pharma up by 2.92%, Tata Motors - DVR up by 2.77%, Bajaj Auto up by 2.28% and Tata Motors up by 1.84%. (Provisional)

On the flip side, Yes Bank down by 1.91%, ITC down by 1.85%, TCS down by 1.19%, Power Grid down by 1.09% and Hindustan Unilever down by 0.89% were the top losers. (Provisional)

Meanwhile, expressing optimism over India’s growth, the Organisation for Economic Co-operation and Development (OECD) in its latest Economic Outlook has said that the country’s economic growth will regain strength and approach 7.5% by 2020. The new income scheme for small farmers will support rural consumption. Investment growth will accelerate as capacity utilisation rises, interest rates decline, and geopolitical tensions and political uncertainty are assumed to wane. Lower oil prices and the recent appreciation of the rupee will reduce pressures on inflation and the current account.

The intergovernmental agency has said reducing the high public debt-to-GDP ratio would require improving the collection of the Goods and Services Tax (GST) and broadening the personal income tax base. Ensuring a swift resolution of bankruptcy processes would help contain non-performing loans and boost productivity by promoting the reallocation of resources to more productive firms and sectors. It added that India has the fastest growth among G20 economies. Besides, fiscal policy is supporting consumption demand.

As per the report, with inflation well below the mid-band point target, inflation expectations adjusting down, and existing slack, there is room for a cut in policy rates. With banks’ health gradually improving, as evidenced by the recent decline in stressed assets, lending rates should adjust more swiftly, and support the revival of business investment. To avoid a new build-up of non-performing loans, public banks’ governance should be improved to ensure sound portfolio decisions.

On the global front, the OECD has cut its forecast for the world economy, urging governments to resolve their trade disputes as the latest flare-up in the China-US trade war threatens to crimp global growth. It said as it pared back its forecast for global growth to 3.2% this year from 3.3% earlier. It notched up its forecast for US growth this year by 0.2 percentage point to 2.8%, but predicted a slowdown to 2.3% next year. Chinese growth is projected to slow to 6.2% this year and 6.0% next year. The outlook for the euro area growth unchanged at 1.2% this year.

The CNX Nifty ended at 11743.45, up by 34.35 points or 0.29% after trading in a range of 11682.40 and 11784.80. There were 33 stocks advancing against 17 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indusind Bank up by 5.58%, Sun Pharma up by 3.12%, Bajaj Auto up by 2.31%, BPCL up by 2.11% and Eicher Motors up by 1.57%. (Provisional)

On the flip side, Indiabulls Housing Finance down by 3.19%, Tech Mahindra down by 3.01%, Bharti Infratel down by 2.52%, ITC down by 1.88% and Yes Bank down by 1.84% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 32.84 points or 0.45% to 7,361.76, France’s CAC rose 2.23 points or 0.04% to 5,387.69 and Germany’s DAX was up by 32.71 points or 0.27% to 12,176.18.

Asian markets ended mostly lower on Wednesday despite the overnight gains on Wall Street after the US temporarily eased trade restrictions on Chinese telecom giant Huawei. Investors are also cautious as they look ahead to the release of minutes of the US Federal Reserve's latest monetary policy meeting later in the day. Chinese shares ended down as trade tensions continued to linger. While, Japanese shares ended largely unchanged after the New York Times reported that the Trump administration is considering placing limits to Chinese video surveillance firm Hikvision's ability to buy US technology.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,891.70-14.27-0.49

Hang Seng

27,705.9448.7048.70

Jakarta Composite

5,939.64-11.73-0.20

KLSE Composite

1,603.74-1.62-0.10

Nikkei 225

21,283.3710.920.05

Straits Times

3,183.14-0.12--

KOSPI Composite

2,064.863.610.18

Taiwan Weighted

10,457.22-7.28-0.07
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