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Bourses make recovery to settle off day’s low points
Feb-15-2019

Indian equity benchmarks made a recovery to settle off their intraday low points on the last trading day of the week, with the Sensex and Nifty closing with a loss of around two tenth of a percent each. The start of the day was sluggish, with the economic research wing of SBI stating that it is erroneous to come to a conclusion of heightened economic activity using the jump in currency in circulation (CIC). It estimated that cash in the economy at Rs 20.4 lakh crore, stressing the rural economy continues to be depressed. It pointed out to data from leading indicators, including passenger car sales, commercial vehicle sales and two wheeler sales, among others, which shows a dip in activity, to point out that the higher CIC does not suggest a jump in economic activity. The market participants failed to take any sense of relief with reports that the government has set up an inter-ministerial committee headed by the finance minister to decide on exceptions and further inclusions of left-out farmers who fail to meet the existing eligibility criteria of the PM KISAN scheme.

However, in the second half of the session, key indices managed to trim their losses, supported by Chief Economic Adviser K V Subramanian’s statement that the economic growth is expected to accelerate to 7.5% in next financial year (FY20), from 7.2% projected for the current financial year (FY19). He further stated in the last four years the GDP growth rate has been 7.3% that was highest across all government since liberalisation. Some relief also came with a report that Indian companies raised Rs 4.57 trillion through private placement of corporate bonds during the first 10 months of the current fiscal to meet business needs. According to the latest data available with the Securities and Exchange Board of India (Sebi), firms raked in Rs 4,56,962 crore during the April-January period of 2018-19 via private placement of corporate bonds, compared with Rs 4,87,764 crore garnered in the corresponding period last fiscal. In the full financial year 2017-18, companies had raised Rs 6 trillion through the route. 

On the global front, European markets were trading in green, after data from Eurostat showed that Gross Domestic Product in Eurozone grew 0.2% in the fourth quarter, over the preceding quarter. Compared to same quarter a year ago, GDP was up 1.2% after a 1.6% increase in the three months to September. Besides, Eurozone employment grew 0.3% sequentially in the fourth quarter, after a 0.2% rise in the previous three months. However, Germany's economy stagnated in the fourth quarter of 2018 to avoid a technical recession. The preliminary data from the Federal Statistical Office showed that GDP came in unchanged from the third quarter, when the economy contracted 0.2 percent. The street was looking for a modest increase of 0.1%. Asian markets ended in red, as two days of US-Chinese trade talks ended with no immediate word of progress and Spain entered a new period of political uncertainty. Spanish Prime Minister Pedro Sánchez has called for a snap general election in April, two days after his minority Socialist government suffered a major defeat in Parliament.

Back home, banking stocks ended lower, despite credit rating agency, Care Ratings’ latest report that the NPA situation in the banking sector has been stabilising, with slowing growth of NPAs during third quarter of current fiscal as compared to a year ago. As per the report, gross NPAs rose at rate of 8.4% in Q3FY19, lower than double-digit growth of 30.4% in Q3FY18, due to lower incremental NPAs being generated. Auto Parts & Equipment companies stocks also fell, even after the rating agency ICRA said a supportive framework for electric vehicle transition was imperative and a clear roadmap on faster adoption on hybrid and electric vehicles would help auto-component industry to firm up investment plans. However, selected stocks of the real estate sector ended higher, supported by Finance Minister Piyush Goyal’s statement that the government is considering giving relief to the real estate sector and the next GST Council meeting could take some steps to address their issues even as he asked the banks to meet the realty sector on stalled projects in two weeks.

Finally, the BSE Sensex fell 67.27 points or 0.19% to 35,808.95, while the CNX Nifty was down by 21.65 points or 0.20% to 10724.40.

The BSE Sensex touched a high and a low of 36,022.57 and 35,510.97, respectively and there were 12 stocks advancing against 19 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 1.18%, while Small cap index was down by 0.83%.

The top gaining sectoral indices on the BSE were Utilities up by 2.63%, Power up by 2.17%, Oil & Gas up by 1.44%, Energy up by 1.29% and Telecom up by 1.06%, while Metal down by 2.32%, Healthcare down by 2.27%, Basic Materials down by 1.63%, Auto down by 1.21% and Consumer Disc down by 0.92% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 4.13%, Power Grid up by 3.12%, ONGC up by 2.27%, Reliance Industries up by 1.47% and Larsen & Toubro up by 1.31%. On the flip side, Sun Pharma down by 3.94%, Tata Steel down by 3.12%, Vedanta down by 2.87%, Hero MotoCorp down by 2.75% and Bajaj Finance down by 1.90% were the top losers.

Meanwhile, the economic research wing of State Bank of India (SBI) has said that jump in currency in circulation (CIC) cannot be taken as a leading indicator of heightened economic activity, specifically the narrative of large cash usage in informal economy. It also claimed that the higher CIC is because of a change in demand for cash more than two years after re-monetization and added that money supply has been restored to full level now.

It estimated cash in Indian economy at Rs 20.4 lakh crore, stressing the rural economy continues to be depressed. It pointed out to data from leading indicators, including passenger car sales, commercial vehicle sales and two wheeler sales, among others, which shows a dip in activity, to point out that the higher CIC does not suggest a jump in economic activity. Elaborating on the same, it said there is a trend towards using currency notes of lower denomination as the re-monetisation is going through and also pointed out that the printing of Rs 2000 notes, introduced post demonetisation in November 2016, has been stopped by the RBI.

It  explained ‘this means to sustain a transaction of same amount now, more currency notes are required/volume of currency notes goes up and thus by default the value of CIC also goes up as more and more small notes are printed to at least ensure we are not reneging on economic activity’.  Besides, It said ‘we are in a state of 'paradox' at present, where the CIC has expanded but the income velocity of money has shown a sharp plunge.’

The CNX Nifty traded in a range of 10,785.75 and 10,620.40. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.83%, NTPC up by 3.05%, GAIL India up by 2.94%, Power Grid up by 2.77% and Bharti Infratel up by 2.44%. On the flip side, JSW Steel down by 4.99%, Dr. Reddy’s Lab down by 4.17%, Sun Pharma down by 4.06%, Hero MotoCorp down by 3.21% and Tata Steel down by 3.17% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 gained 15.74 points or 0.22% to 7,212.75 and France’s CAC was up by 34.91 points or 0.69% to 5,097.43, while Germany’s DAX was down by 8.30 points or 0.07% to 11,081.49.

Asian markets ended in red on Friday in wake of mounted selling pressure following weak data from the US and China rekindled investor worries about a slowdown in the global economy. US President Donald Trump's insistence that border security justifies a state of emergency and skepticism over the latest round of US-China trade talks also kept investors nervous. Chinese shares ended lower after latest data raised deflation fears. Consumer prices in China were up 1.7 percent year on year in January, the National. That was shy of expectations for an increase of 1.9 percent, which would have been unchanged from the December reading. Factory inflation slowed for the seventh straight month on cooling demand. Producer prices were up 0.1 percent on year, shy of expectations for an increase of 0.5 percent and down from 0.9 percent in the previous month. Further, Japanese shares ended sharply down as a firm yen pulled down exporters, and falling US yields on the back of weak US data weighed on the financial sector.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,682.38
-37.32
-1.37

Hang Seng

27,900.84
-531.21
-1.87

Jakarta Composite

6,389.08
-30.94
-0.48

KLSE Composite

1,688.83

-0.23

-0.01

Nikkei 225

20,900.63
-239.08
-1.13

Straits Times

3,239.74
-13.42
-0.41

KOSPI Composite

2,196.09
-29.76
-1.34

Taiwan Weighted

10,064.78
-24.23
-0.24


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