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Benchmarks trade with traction in early deals
Dec-17-2018

Indian equity benchmarks made an optimistic start and are trading in fine fettle in early deals with frontline gauges recapturing their crucial 36,100 (Sensex) and 10,850 (Nifty) levels, as traders took comfort with commerce ministry’s latest data showed that India’s exports grew by a meager 0.80% to $26.5 billion in November, even as the trade deficit widened to $16.67 billion. Exporters attributed the marginal export growth in November to high base effect, as the foreign shipments in the comparable month of the previous fiscal were quite high at $26.29 billion. Besides, imports rose by 4.31% to $43.17 billion during the month. Traders also took some encouragement with Finance Minister Arun Jaitley’s statement that the government will stick to the 3.3% fiscal deficit target in the current financial year. He also said India will clock a growth rate of 7-8% despite global uncertainties and will retain the tag of the world’s fastest-growing major economy.

On the global front, most of the Asian counters trading in green at this point of time as traders shrugged off weak economic data from China and Europe which added to evidence of cooling global growth and reinforced anxiety over the impact of international trade frictions on business and profits. The US markets settled in red territory on Friday amid renewed concerns about the outlook for global economic growth following the release of data showing disappointing industrial output and retail sales growth in China.

Back home, Economic Affairs Secretary Subhash Chandra Garg said the Indian economy has a large overhang of public debt and there is a need to focus on reducing this in the next 4-5 years. Meanwhile, stocks related to hospitality industry remained buzzing with Icra’s report that the hospitality industry is expected to grow annually by 9-10% over the next four years, mainly due to robust domestic demand and a muted supply pipeline.

The BSE Sensex is currently trading at 36182.60, up by 219.67 points or 0.61% after trading in a range of 36123.62 and 36226.75. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.38%, while Small cap index was up by 0.26%.

The top gaining sectoral indices on the BSE were Power up by 1.94%, Utilities up by 1.82%, Metal up by 1.73%, PSU up by 1.11% and Basic Materials was up by 0.85%, while Realty down by 0.47%, Consumer Durables down by 0.32%, IT down by 0.11% and TECK was down by 0.05% were the few losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 4.31%, Vedanta up by 3.43%, Tata Motors up by 2.82%, NTPC up by 2.40% and Tata Motors - DVR up by 2.40%. On the flip side, Kotak Mahindra Bank down by 0.68%, Hero MotoCorp down by 0.66%, Infosys down by 0.44%, Asian Paints down by 0.21% and Hindustan Unilever down by 0.10% were the top losers.

Meanwhile, expressing optimism over India’s fiscal position, Finance Minister Arun Jaitley has said that the government will stick to its fiscal deficit target in the current financial year (FY19) because when current account deficits are impacted by oil prices and strengthening dollar, the last thing that India can afford is to run itself into a twin deficit situation because a fallout of that is very serious. The government has budgeted to contain fiscal deficit at 3.3% of the Gross Domestic Product (GDP) in the current fiscal, lower than 3.5% in 2017-18. As per latest data, fiscal deficit in April-October period stood at 103.9% of budget estimates.

On the growth front, he said even though there are global uncertainties, India will clock a growth rate of 7-8% and will retain the tag of the world’s fastest growing major economy. He added ‘in course of the next few years, we intend to overtake the UK in terms of GDP and come close to Japan in terms of GDP not per capita income’. Since India is a major importer, Jaitley said oil prices have a direct impact on the country. He also said India has a particular resistance capacity to deal with rising crude oil prices and when it breaches the limit, it can impact inflation, currency and the current account deficit (CAD). The CAD, which is the difference between the inflow and outflow of foreign exchange, widened to 2.9% of GDP in the July-September quarter from 2.4% of GDP in April-June.

Noting down the challenges to the economy, the Finance Minister said there is a need to get out of the ‘syndrome of difficulties in credit’ and improve the liquidity situation in the market. The second challenge is ‘even when the election year debate goes on, many like you (industry) will have to flag to different players in the political system the importance of sound policy and how much they can be blended with good politics’. He said India cannot afford to have fragile coalitions for stable policy decisions and continue on the path of reforms. He said a coalition government would lead to a situation where the country probably will have a helpless Centre dependent on these kind of players.

The CNX Nifty is currently trading at 10856.45, up by 51.00 points or 0.47% after trading in a range of 10844.85 and 10876.55. There were 32 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Power Grid Corporation up by 4.15%, Vedanta up by 2.93%, Tata Motors up by 2.76%, NTPC up by 2.44% and ICICI Bank up by 1.99%. On the flip side, Indiabulls Housing down by 1.22%, Bajaj Finserv down by 0.97%, Kotak Mahindra Bank down by 0.83%, Bharti Infratel down by 0.79% and Hero MotoCorp down by 0.73% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 gained 162.31 points or 0.76% to 21,537.14, Straits Times surged 42.40 points or 1.38% to 3,119.49, Hang Seng rose 7.60 points or 0.03% to 26,102.39, Taiwan Weighted jumped 14.44 points or 0.15% to 9,788.60 KOSPI increased 2.80 points or 0.14% to 2,072.18 and Shanghai Composite was up by 0.24 points or 0.01% to 2,593.98. On the flip side, Jakarta Composite was down by 64.37 points or 1.04% to 6,105.47.
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