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Benchmarks hold head above water in volatile session
Dec-05-2019

In the volatile session of trade, Indian equity markets are managing to keep their head above water and further markets added gains to trade marginally in green in the late afternoon session, as the gains in Capital Goods, IT and TECK stocks were offset by selling pressure in Metal, telecom and PSU stocks. Beside, broader indices, BSE Mid cap and Small cap are also showing mixed trend. Traders took a note of report that Reserve Bank of India (RBI) kept repo rate unchanged at 5.15 per cent in its fifth bi-monthly policy review of the year. Adding some comfort, 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.

On the global front, European markets were trading mostly in green, amid mixed signals on a US -China 'phase-one' trade deal. Meanwhile, Germany's manufacturing new orders declined in October, defying expectations for further increase. Back home, on the sectoral front, Infra stocks remained in focus with Union Minister Rao Inderjit Singh’s statement that as per the flash report of July, 2019, a total of 355 projects are showing cost overrun and the overall cost overruns is Rs 3.88 trillion.

The BSE Sensex is currently trading at 40939.90, up by 89.61 points or 0.22% after trading in a range of 40730.58 and 41002.41. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index declined 0.06%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.08%, IT up by 1.02%, TECK up by 0.77%, Industrials up by 0.51% and Consumer Durables was up by 0.38%, while Metal down by 1.79%, Telecom down by 1.78%, Basic Materials down by 0.85%, PSU down by 0.79% and Oil & Gas was down by 0.69% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.00%, Larsen & Toubro up by 1.96%, ITC up by 1.30%, Infosys up by 0.82% and Asian Paints up by 0.72%. On the flip side, Bharti Airtel down by 1.93%, Tata Steel down by 1.64%, Sun Pharma down by 1.52%, Vedanta down by 1.35% and Indusind Bank down by 1.23% were the top losers.

Meanwhile, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC), in its fifth bi-monthly monetary policy review of 2019-20, has kept policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.15%. This came after five consecutive cuts. Consequently, the reverse repo rate under the LAF remains unchanged at 4.90%, and the marginal standing facility (MSF) rate and the Bank Rate at 5.40%. It has kept key rate unchanged in line with its objective of achieving its medium-term inflation target of 4%, with an upper and lower limit of 6% and 2%, respectively, while supporting growth. The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth. The MPC has recognized that there is monetary policy space for future action. However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture.

On the inflation front, the CPI inflation projection is revised upwards to 5.1-4.7% for H2:2019-20 and 4.0-3.8% for H1:2020-21, with risks broadly balanced. The MPC noted that the upsurge in prices of vegetables is likely to continue in immediate months. Also, incipient price pressures seen in other food items such as milk, pulses, and sugar are likely to be sustained, with implications for the trajectory of food inflation. It added that both the 3-month and 1-year ahead inflation expectations of households polled by the RBI have risen and these latent sentiment upsides are being reflected in other surveys as well. Moreover, domestic financial markets have exhibited volatility and domestic demand has slowed down, which is being reflected in the softening of inflation excluding food and fuel.

With weak domestic and external demand conditions, the central bank has revised its real Gross Domestic Product (GDP) growth forecast downwards to 5.0% for 2019-20 (FY20) from 6.1% projected in its October policy. It also said growth is likely to be 4.9-5.5% in H2 and 5.9-6.3% for H1:2020-21. The RBI stated that while improved monetary transmission and a quick resolution of global trade tensions are possible upsides to growth projections, a delay in revival of domestic demand, a further slowdown in global economic activity and geo-political tensions are downside risks. The MPC noted that economic activity has weakened further and the output gap remains negative. However, several measures already initiated by the Government and the monetary easing undertaken by the RBI since February 2019 are gradually expected to further feed into the real economy.

The CNX Nifty is currently trading at 12060.00, up by 16.80 points or 0.14% after trading in a range of 12001.95 and 12081.20. There were 19 stocks advancing against 30 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were Zee Entertainment up by 6.98%, TCS up by 2.01%, Larsen & Toubro up by 1.99%, Britannia Industries up by 1.32% and ITC up by 1.27%. On the flip side, Coal India down by 2.64%, JSW Steel down by 2.42%, Bharti Airtel down by 2.04%, BPCL down by 1.67% and Tata Steel down by 1.64% were the top losers.

Asian market were trading mostly in green; Nikkei 225 surged 164.86 points or 0.71% to 23,300.09, Hang Seng increased 154.48 points or 0.59% to 26,217.04, Taiwan Weighted strengthened 84.18 points or 0.73% to 11,594.65, Jakarta Composite soared 32.53 points or 0.53% to 6,145.41, Straits Times advanced 13.96 points or 0.44% to 3,173.75 and Shanghai Composite gained 21.35 points or 0.74% to 2,899.47. On the flip side, KOSPI was down by 8.15 points or 0.39% to 2,060.74.

European markets were trading mostly in green; France’s CAC increased 24.29 points or 0.42% to 5,823.97 and Germany’s DAX rose 4.46 points or 0.03% to 13,145.03, while UK’s FTSE 100 decreased 10.62 points or 0.15% to 7,177.88.
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