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Local equities continue firm trade on hopes of rate cut by RBI
Dec-05-2019

Local equity benchmarks have gathered some pace and continue to trade firm in morning deals due to increased buying by funds, ahead of the Reserve Bank of India’s (RBI) policy meeting outcome later in the day. Traders are expecting that RBI is likely to cut the repo rate for the sixth time in a row to support the economy which has hit a 26-quarter low at 4.5% in the second quarter, and may pause to see transmission. Traders were seen piling positions in Consumer Durables, Realty and IT sector, while selling was witnessed in Telecom, Metal and Healthcare sector stocks. Traders took some support with a private report indicating that India's gross domestic product (GDP) to grow at 5.8 percent for the financial year 2019-20. Sentiments remain positive as Union Cabinet approved the launch of an exchange-traded fund (ETF) for bonds to create an additional source of funding for Central Public Sector Enterprises (CPSEs) and state-owned financial institutions. However, further gains remain capped as traders were concerned with World Bank’s statement that India faces twin threats to its income from global trade which makes up 48 per cent of India’s GDP - rise of protectionism and trade wars and technological change.

On the global front, Asian markets were trading mostly in green, amid renewed hopes a US trade deal with China may be nearing, despite tough recent talk from President Donald Trump. Back home, India has moved seven places up and ranked 73rd out of 152 countries in the United Nations Conference on Trade and Development's (UNCTAD) Business-to-Consumer (B2C) E-commerce Index 2019.

The BSE Sensex is currently trading at 40945.85, up by 95.56 points or 0.23% after trading in a range of 40865.38 and 41002.41. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.02%, while Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.70%, Realty up by 0.66%, IT up by 0.56%, Energy up by 0.45% and Consumer Discretionary was up by 0.35%, while Telecom down by 1.74%, Metal down by 0.99%, Healthcare down by 0.68%, Utilities down by 0.34% and Basic Materials was down by 0.31% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.36%, ICICI Bank up by 1.00%, ITC up by 0.88%, Tech Mahindra up by 0.84% and Hero MotoCorp was up by 0.81%. On the flip side, Sun Pharma down by 1.94%, Bharti Airtel down by 1.89%, Yes Bank down by 1.67%, Tata Motors - DVR down by 1.14% and Tata Motors was down by 0.86% were the top losers.

Meanwhile, Union Minister Rao Inderjit Singh has said as many as 355 infrastructure projects are showing cost overrun, with the overall cost overrun being Rs 3.88 trillion. He said the reasons for cost overruns are project- specific, depend on a variety of technical, financial and administrative factors, and differ from project to project. The Ministry of Statistics and Programme Implementation monitors ongoing central sector infrastructure projects costing Rs 150 crore and above on time and cost overruns, on the basis of information provided by project implementing agencies on the online computerised monitoring system (OCMS).

He mentioned that as reported by the project implementing agencies on the OCMS of this ministry, the main reasons for increase in cost of the projects are under-estimation of original cost, changes in rates of foreign exchange and statutory duties, high cost of environmental safeguards and rehabilitation measures.

He added that spiralling land acquisition costs, shortage of skilled manpower and labour, changes in project scope, monopolistic pricing by vendors of equipment services, general price rise and inflation and time overruns are a few other reasons. Delay in land acquisition and forest clearance has been one of the reasons for time overrun leading to cost overrun as reported by implementing agencies.

The CNX Nifty is currently trading at 12057.80, up by 14.60 points or 0.12% after trading in a range of 12045.15 and 12079.50. There were 20 stocks advancing against 29 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Zee Entertainment up by 4.66%, TCS up by 1.32%, Titan Co up by 1.26%, ICICI Bank up by 1.02% and ITC was up by 0.88%. On the flip side, Coal India down by 2.10%, Bharti Airtel down by 1.90%, Sun Pharma down by 1.80%, Yes Bank down by 1.75% and JSW Steel was down by 1.56% were the top losers.

Asian markets were trading mostly in green, Nikkei 225 surged 182.58 points or 0.79% to 23,317.81, Hang Seng increased 99.80 points or 0.38% to 26,162.36, Taiwan Weighted strengthened 73.94 points or 0.64% to 11,584.41, Jakarta Composite soared 27.58 points or 0.45% to 6,140.46, Straits Times advanced 15.60 points or 0.49% to 3,175.39 and Shanghai Composite was up by 9.27 points or 0.32% to 2,887.39. On the other side, KOSPI was down by 6.99 points or 0.34% to 2,061.90.
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