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EQUITY
Post Session: Quick Review
Nov-16-2018

Indian equity benchmarks traded with volatility, but in green terrain, throughout the day and finished last day of the week with a gain of over half a percent, boosted by rupee’s gains against the US dollar and recent decline in global oil prices. This was the second consecutive day of rise for the domestic markets, recapturing their crucial 10,650 (Nifty) and 35,400 (Sensex) bastions. Markets made good start, as traders took some encouragement with report that India’s exports rose by 17.86% to $26.98 billion in October 2018 as compared to $22.89 Billion in October 2017. Exports bounced back in October to high double-digit figures after the mild contraction in September as engineering goods, pharmaceutical and chemical shipments picked up the pace. During the April-October period of the current financial year, exports grew by 13.27% to $191 billion. Traders remained optimistic with Fitch’s report stating that India’s real GDP growth is expected to be at 7.8% in FY19, up from 6.7% in FY18 even as the government may find it tough to meet its fiscal deficit target of 3.3%.

Market sentiments also got boosted with a private report stating that with bilateral trade between India and the South American country Peru touching an all-time high of $1.60 billion, the next round of talks for the free trade agreement (FTA) between the two countries is scheduled to take place next month. Traders took note of Secretary of the Department of Industrial Policy and Promotion (DIPP) Ramesh Abhishek’s statement that the government will soon unveil a new industrial policy which may include a dedicated chapter on the importance of design. However, further up-ward move got restricted as some anxiety spread among the traders with the trade deficit for the month of October 2018 widening to $17.13 billion v/s $13.98 billion in September on account of import growth again picked up. The deficit widened despite a decline of 42.9% in gold imports to $1.68 billion. Imports during the month also rose by 17.62% to $44.11 billion, leading to widening of trade deficit.

On the global front, Asian markets ended mostly higher on Friday, aided by an overnight advance on Wall Street even as uncertainty over U.S.-China trade relations and mainland economic outlook weighed on confidence. European markets were trading in green, as investors closely monitored the ongoing political turmoil in the U.K. Back home, the Tourism sector stocks remained in action as tourism sector has pledge Rs 6.25 billion of fresh investments during the biennial investors’ conclave- Make in Odisha 2018. Telecom sector too was in focus with industry body COAI stating that telecom companies have completed installation of 5 lakh mobile towers in the country till date with a total investment of Rs 10.44 lakh crore.

The BSE Sensex ended at 35462.93, up by 202.39 points or 0.57% after trading in a range of 35324.37 and 35545.85. There were 19 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index rose 0.04%, while Small cap index was down by 0.43%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 6.36%, Energy up by 1.40%, TECK up by 1.15%, Healthcare up by 0.58% and FMCG up by 0.53%, while Metal down by 1.49%, Oil & Gas down by 0.59%, Utilities down by 0.46%, Basic Materials down by 0.41% and PSU down by 0.32% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 9.87%, Reliance Industries up by 2.79%, HDFC up by 2.12%, SBI up by 2.00% and Hero MotoCorp up by 1.24%. (Provisional)

On the flip side, Yes Bank down by 6.99%, Tata Steel down by 2.45%, Maruti Suzuki down by 1.98%, Axis Bank down by 1.51% and ONGC down by 1.42% were the top losers. (Provisional)

Meanwhile, citing weak fiscal position continues to constrain the ratings and there were significant risks to macroeconomic outlook, Fitch Ratings has refused to upgrade India’s credit rating for the 12th year in a row and affirmed the country’s long-term foreign-currency issuer default rating (IDR) at 'BBB-' with a Stable Outlook. The rating agency had last upgraded India's sovereign rating from BB+ to BBB- with a stable outlook on August 1, 2006. It also said that the rating balances a strong medium-term growth outlook and favourable external balances relative to peers with weak fiscal finances, a fragile financial sector and some lagging structural factors.

As per the rating agency, risks to the macroeconomic outlook are significant, and include a drop in credit growth, resulting from further problems in the banking or shadow-banking sector. It added that a weak fiscal position continues to constrain India's sovereign ratings. It also expressed caution that as government debt at close to 70% of Gross Domestic Product (GDP), the government may find it tough to meet its fiscal deficit target of 3.3% of GDP in the current financial year (2018-19) due to lower revenues including from GST in first half, and expenditures being difficult to control in the run-up to general elections were main reasons for the weak fiscal position. It noted that the Indian economy continues to exhibit some structural weaknesses relative to peers and is less developed on a number of metrics.

On the economic growth front, Fitch stated that its strong growth outlook continues to stand out among peers and upgraded it real GDP growth forecast at 7.8% for the current financial year ending March 2019 (2018-19) from 7.3% forecasted earlier in April this year, while it is also up from 6.7% in the previous FY2017-18. However, this forecast is subject to downside risks from tightening financial conditions, weak financial-sector balance sheets and high international oil prices. It also forecasts growth to decelerate to a still-strong 7.3% in both FY2019-20 and FY2020-21 for the same reasons. Besides, it expected current-account deficit to widen to 3% in FY2018-19 and 3.1% in FY2019-20 from 1.9% in FY2017-18.

Listing recent defaults by Infrastructure Leasing & Financial Services and some public-sector banks, the rating agency highlighted risks in a sector that in recent years supplied around a third of total credit growth. It said banks do not seem in a position to significantly spur credit growth, as they still have weak core capital positions and added that non-performing loan (NPL) ratio could in near future rise from 11.6% in FY2017-18 due to residual stress. It further said while India jumping 53 positions in just two years to 77th out of 190 countries on the World Bank's Ease of Doing Business ranking was remarkable, lingering difficulties in doing business in India remain, including in starting a business and enforcing contracts, and FDI is lagging.

The CNX Nifty ended at 10689.00, up by 72.30 points or 0.68% after trading in a range of 10631.15 and 10695.15. There were 32 stocks advancing against 18 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Airtel up by 9.38%, HCL Tech. up by 3.66%, Eicher Motors up by 3.42%, Bajaj Finance up by 3.02% and Reliance Industries up by 2.74%. (Provisional)

On the flip side, Yes Bank down by 6.97%, Indiabulls Housing Finance down by 4.81%, JSW Steel down by 2.52%, Indian Oil Corp. down by 2.49% and Tata Steel down by 2.47% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 was up by 15.65 points or 0.22% to 7,053.66, France’s CAC rose 22.47 points or 0.44% to 5,056.09 and Germany’s DAX added 66.20 points or 0.58% to 11,419.87.

Asian markets ended mostly higher on Friday. Chinese shares rose to hit a fresh one-month high after Beijing reportedly delivered a written response to US trade demands, raising hopes of a thaw in trade relations. However, anxiety around Brexit and conflicting reports about progress in US-China trade talks keeping investors nervous. Investors remained focused on the political turmoil in the UK after four ministers--including Brexit Minister Dominic Raab resigned in protest to Prime Minister Theresa May's draft Brexit agreement. Japanese shares ended lower as Nvidia's worse-than-expected earnings pulled down semiconductor-related stocks.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,679.11

10.94

0.41

Hang Seng

26,183.53

80.19

0.31

Jakarta Composite

6,012.35

56.61

0.94

KLSE Composite

1,706.38

12.17

0.72

Nikkei 225

21,680.34

-123.28

-0.57

Straits Times

3,083.60

29.07

0.94

KOSPI Composite

2,092.40

4.34

0.21

Taiwan Weighted

9,797.09

-29.37

-0.30
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