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Indices erase intraday losses to end with marginal gains
Aug-18-2022

Indian equity benchmarks managed to erase intraday losses in the final trading hour to end above the flat line on Thursday. Key gauges started the session in red territory and stayed in red for most part of the day, as traders remained cautious with former deputy chairman of the erstwhile Planning Commission Montek Singh Ahluwalia said it would be unrealistic to assume that India would record a sustained growth of 8 per cent, which is needed to become a developed nation by 2047. Domestic sentiments remained weak amid a private report stating that India’s economy grew at a slower pace than the monetary policy committee's (MPC’s) projection of 16.2 per cent in the first quarter of financial year 2022-23 (Q1FY23). Their projections range between 14.5 per cent and 16 per cent.

However, key gauges reversed losses and ended with gains, taking support from report stated that with RBI hiking the lending rate, the Union Cabinet earmarked Rs 34,856 crore towards the interest subvention scheme to help banks provide short term agriculture loans of up to Rs 3 lakh at a rate of 7 per cent. Information and Broadcasting Minister Anurag Singh Thakur said the Cabinet has decided to restore interest subvention on short term agriculture loans to 1.5 per cent for all financial institutions. Some support also came as the ministry of statistics and programme implementation in its final Annual Survey of Industries (ASI) said manufacturing sector investments grew 20.9% in 2019-20 over the previous fiscal. Besides, the latest exchange data showed foreign institutional investors remained net buyers in the capital market on Wednesday as they purchased shares worth Rs 2,347.22 crore.

On the global front, European markets were trading mostly in green on a boost from oil stocks, with gains capped by growth fears as inflation reached a record high in July and European Central Bank officials hinted at another large rate hike next month. Asian markets settled mostly lower on Thursday following the broadly negative cues from global markets, as worries about slowing growth and soaring inflation continue to weigh on market sentiment. The US Fed minutes also reaffirmed the central bank's plans to continue raising interest rates in an effort to return inflation to its 2 percent objective.

Back home, telecom stocks were in focus as data released by sector regulator Trai showed that telecom subscriber base in the country grew marginally to 117.29 crore in June with Reliance Jio adding maximum number of new customers. There were 117.07 crore subscribers in May 2022. some of the stocks related to aviation sector were down as Credit ratings agency ICRA in its latest report said that elevated Aviation Turbine Fuel (ATF) prices and rupee depreciation are likely to pose a serious threat to the recovery process for domestic carriers.

Finally, the BSE Sensex rose 37.87 points or 0.06% to 60,298.00 and the CNX Nifty was up by 12.25 points or 0.07% to 17,956.50.

The BSE Sensex touched high and low of 60,341.41 and 59,946.44, respectively. There were 15 stocks advancing against 15 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.42%, while Small cap index was up by 0.34%.

The top gaining sectoral indices on the BSE were Realty up by 1.76%, Utilities up by 1.09%, Power up by 0.96%, Capital Goods up by 0.91% and Industrials up by 0.90%, while Oil & Gas down by 0.79%, IT down by 0.75%, TECK down by 0.66%, Energy down by 0.59% and Auto down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 3.45%, Larsen & Toubro up by 2.09%, Bharti Airtel up by 1.59%, Ultratech Cement up by 1.53% and Indusind Bank up by 1.50%. On the flip side, Dr. Reddy's Lab down by 2.18%, Wipro down by 1.83%, Infosys down by 1.50%, Mahindra & Mahindra down by 1.04% and Axis Bank down by 0.87% were the top losers.

Meanwhile, expressing some cautiousness over the country’s growth, former deputy chairman of the erstwhile Planning Commission Montek Singh Ahluwalia has said it would be unrealistic to assume that India would record a sustained growth of 8 per cent, which is needed to become a ‘developed nation’ by 2047. He added India's annual per capita income is around $2,000 and it is unlikely that it would increase to $12,000 by 2047 to become a high-income country as per the World Bank's definition. According to him, those who think India's growth projections in the near future are 7 - 7.5 per cent should recognise that the country cannot maintain that pace for such a long time. He added that ‘so 6 per cent average economic growth rate (for India) is not unreasonable’.

He further said in the strong policy scenario, India's annual per capita income will be about $9,600 by 2047, and in the central scenario, the country would get to $7,500. Noting that those are significant improvements from the present level, he said ‘but I think we need to be a little realistic on what exactly can be achieved in this period, given the growth rates that are possible’. India, which is the world's sixth largest economy with a GDP of $2.7 trillion, is currently classified as a developing nation.

He said ‘now of course it is quite possible that somebody projects that India can grow at 8 per cent, then maybe the target would become feasible’, but added that he is not sure about these projections. India was classified as a 'third-world' country at the time of Independence from British rule in 1947. But over the past seven decades, its GDP has grown from just Rs 2.7 lakh crore to Rs 150 lakh crore. He also said climate change could be the biggest threat to growth and prosperity, especially for countries in the tropics and India could be one of the worst affected. He added the single most important thing India has to do is to de-carbonise the generation of power.

The CNX Nifty traded in a range of 17,968.45 and 17,852.05. There were 24 stocks advancing against 25 stocks declining, while 1 stock remains unchanged on the index. 

The top gainers on Nifty were Kotak Mahindra Bank up by 3.90%, Larsen & Toubro up by 2.06%, Tata Consumer Product up by 1.72%, Ultratech Cement up by 1.50% and Indusind Bank up by 1.50%. On the flip side, Dr. Reddy's Lab down by 2.13%, UPL down by 2.04%, Wipro down by 1.70%, BPCL down by 1.61% and Infosys down by 1.32% were the top losers.

European markets were trading mostly in green; France’s CAC increased 29.17 points or 0.45% to 6,557.49 and Germany’s DAX increased 98.56 points or 0.72% to 13,725.27, while UK’s FTSE 100 decreased 3.29 points or 0.04% to 7,512.46.

Asian markets settled mostly lower on Thursday, tracking weak US stocks overnight after minutes from the Federal Reserve's July meeting pointed to interest rates staying higher for longer to control inflation back to its 2 percent target. Chinese and Hong Kong shares declined, with property developers falling sharply after Country Garden Holdings Company warned that first-half earnings probably tumbled by as much as 70 percent amid a severe real estate downturn. Moreover, Japanese stocks fell, driven by weakness in the technology sector.

Asian Indices

Last Trade               

Change in Points

Change in %   

Shanghai Composite

3,277.54-14.99-0.46

Hang Seng

19,763.91-158.54-0.80

Jakarta Composite

7,186.5653.110.74

KLSE Composite

1,516.62-1.54-0.10

Nikkei 225

28,942.14-280.63-0.96

Straits Times

3,273.4810.720.33

KOSPI Composite

2,508.05-8.42-0.33

Taiwan Weighted

15,396.76-68.69-0.44


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