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Bourses eke out slender gains; Nifty above 10,800 mark
Dec-14-2018

Benchmark indices experienced volatility on the last trading day of the week but managed to end higher, amid easing wholesale price index (WPI) inflation data. WPI slowed down to 4.64% in November from 5.28% in October. Build up inflation rate in the financial year so far was 4.73% compared to a build up rate of 2.83% in the corresponding period of the previous year. The markets started on weak note, as anxiety spread among traders, with SBI Research’s report stating that Modi government may announce a holistic or selective farm loan waiver, however, it could be the ‘worst solution’ to alleviate farmers’ distress. Adding more anxiety, global credit ratings agency Moody said that liquidity constraints faced by some non-bank financial institutions (NBFIs) will likely tighten overall credit supply and slow India’s economic growth rate to just above 7% for the fiscal 2019 and 2020. In addition, any further distress in the Indian NBFI sector will pose significant downside risks to India's growth outlook.

The key indices fluctuated in green and red terrain during the whole trading session, impacted by Former Reserve Bank of India (RBI) governor Raghuram Rajan’s statement that the Indian economy is not creating enough jobs and that growth is not benefiting everyone. Traders took note of Former Chief Economic Advisor Arvind Subramanian’s statement that the RBI is adequately capitalised, but the money should be used for fixing the financial system, not for financial deficit or financing government expenditure. Separately, the International Monetary Fund said that operational independence of central banks like the RBI was important for carrying out their responsibilities. But, the end of day was positive, despite weak cues from global markets. The traders took support with Export-Import (Exim) Bank report that India’s merchandise shipments are expected to rise by 7% to $82.39 billion during the third quarter this fiscal. Non-oil exports are projected to increase by 7.2% to $71.45 billion.

On the global front, European markets were trading in red, as traders were in a cautious mood amidst some major ECB developments. ECB President Mario Draghi unveiled the latest set of ECB Staff macroeconomic projections for Eurozone, which revealed a further downgrade to the growth projection for next year. The euro area growth forecast for next year was trimmed to 1.7% from 1.8%. The outlook for this year was cut to 1.9% from 2%. Meanwhile, Eurozone flash manufacturing PMI for December came in with a reading of 51.4, down from 51.8 a month earlier. The Composite PMI reading for the month is 51.3, as against expectations of 52.8. Asia markets ended in red, after the latest batch of economic data from China showed industrial output in the country grew by 5.4% in November, slower than the 5.9% growth seen a month earlier. Retail sales in China increased by 8.1% in November, after rising 8.6% in October.

On the sectoral front, consumer durables stocks ended lower, ignoring Electronics and IT Minister Ravi Shankar Prasad’s statement that the government has almost finalised the National Policy on Electronics to boost electronics manufacturing in India on a big scale, while cement sector stocks gained, amid reports that the Goods and Services Tax (GST) Council is likely to rationalise the 28% slab by cutting tax rates on construction items, like cement, in its meeting next week. Further, stocks related to mines and minerals industry remained in focus, with the government’s statement that 19 iron ore mines having reserves worth 581.5 million tonnes (MT) have been auctioned as on date, while public sector banking stocks remained in limelight with report that the government is considering additional capital infusion of up to Rs 30,000 crore in public sector banks as they have been unable to raise required funds from the markets.

Finally, the BSE Sensex surged 33.29 points or 0.09% to 35,962.93, while the CNX Nifty was up by 13.90 points or 0.13% to 10,805.45.

The BSE Sensex touched a high and a low of 36,019.02 and 35,813.85, respectively and there were 21 stocks advancing against 10 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.19%, while Small cap index was up by 0.03%.

The top gaining sectoral indices on the BSE were Telecom up by 3.08%, Oil & Gas up by 1.74%, PSU up by 1.11%, Utilities up by 0.98% and Energy up by 0.95%, while Healthcare down by 0.81%, Capital Goods down by 0.69%, Consumer Durables down by 0.31%, Industrials down by 0.28% and Metal down by 0.07% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 5.32%, Yes Bank up by 3.23%, ONGC up by 2.58%, NTPC up by 1.95% and Infosys up by 1.31%. On the flip side, HDFC down by 1.95%, Wipro down by 1.67%, Larsen & Toubro down by 0.79%, Bajaj Auto down by 0.71% and Sun Pharma down by 0.57% were the top losers.

Meanwhile, NITI Aayog chief executive Amitabh Kant has said that there is need to increase India’s export significantly if the country has to double the size of its economy to $5 trillion by 2025. He also noted that the private sector will play a major role in pushing the country's economy towards the ambitious $5-trillion target.

Kant has said that in the last four years, the government has approved a series of measures coupled with many structural reforms like Rera, GST and IBC, to improve India's position in the World Bank's 'Doing Business' ranking. He also said that these measures will make India extremely efficient in the long run. However, he noted that to address the real challenge of growing the GDP at 9-10 percent over the next three decades, India will have to increase its exports.

NITI Aayog chief executive said “no country has grown without exports. Take the example of Japan, Korea and China, which have grown on the back of exports. So, India needs to push for exports, which would require size and scale of manufacturing and penetrating global markets.” He noted that to achieve this, it is necessary to create 100 champion companies like Tata Consultancy Services (TCS), with proper support from the government.

As part of overall recapitalisation programme of Rs 2.11 trillion for PSBs, government has budgeted a capital infusion of Rs 65,000 crore for PSBs during FY19. Of the total sum, it has already infused Rs 22,900 crore in seven PSBs till November 2018. The balance capital of Rs 42,100 crore is expected to be allocated equally into PCA and non-PCA banks. Out of the 21 state-owned banks, 11 are under the PCA framework, which imposes lending and other restrictions on weak lenders.

The CNX Nifty traded in a range of 10,815.75 and 10,752.10. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 5.25%, BPCL up by 3.00%, Yes Bank up by 2.86%, Indian Oil Corporation up by 2.84% and Coal India up by 2.25%. On the flip side, HCL Tech down by 1.84%, JSW Steel down by 1.73%, HDFC down by 1.67%, Titan down by 1.65% and ZEEL down by 1.65% were the top losers.

All European markets were trading in red; UK’s FTSE 100 dipped 78.09 points or 1.14% to 6,799.41, France’s CAC fell 60.91 points or 1.24% to 4,836.01 and Germany’s DAX was down by 161.29 points or 1.48% to 10,763.41.

Asian markets ended in red on Friday, hurt by data showing disappointing pace of industrial output and retail sales growth in China in the month of November. Worries about slowing global economic growth and skepticism about a trade deal between US and China anytime soon weighed as well on Asian markets. Data showed China's industrial output grew at its slowest pace in nearly three years, increasing by 5.4 percent in November, after growing by 5.9 percent a month earlier. Meanwhile, retail sales in China grew 8.1 percent in November, the weakest growth since 2003. In October, retail sales were up 8.6 percent. The slower pace of industrial output and retail sales growth was due to the impact of the ongoing trade disputes with the US. Japanese market ended lower despite a fairly decent Tankan survey report. The Bank of Japan said in its quarterly Tankan Survey that the index of business and manufacturing sentiment in Japan was steady in the fourth quarter of 2018. The large manufacturing index was unchanged with a score of +19, beating expectations for +18. The outlook came in at +15, shy of forecasts for +17 and down from +19 in the previous three months.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,593.74-40.31-1.53

Hang Seng

26,094.79
-429.56-1.62

Jakarta Composite

6,169.84-7.88-0.13

KLSE Composite

1,661.96-14.04-0.84

Nikkei 225

21,374.83
-441.36
-2.02

Straits Times

3,077.09
-33.99
-1.09

KOSPI Composite

2,069.38-26.17
-1.25

Taiwan Weighted

9,774.16
-84.60
-0.86
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