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EQUITY
Post Session: Quick Review
Jan-18-2019

In choppy session of trade, Indian equity benchmarks gave up all of their losses to end flat on Friday, as investors were cautious ahead of the index heavy-weights' quarterly results, with frontline gauges holding their crucial 36,400 (Sensex) and 10,900 (Nifty) levels. Domestic indices made a slightly positive start and immediately turned in negative zone despite firmness in global peers. Traders failed to get relief with India Ratings and Research’s report that the country’s economy is likely to grow a tad higher at 7.5 per cent in 2019-20 on account of steady improvement in major sectors -- industry and services. It further said Gross Domestic Product (GDP) growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the US dollar, among other factors. The traders even overlooked report that ahead of the monetary policy review, India Inc has urged the Reserve Bank of India (RBI) to cut interest rate and reserve ratio to prop up growth. Industry chambers suggested various measures to ease tight liquidity situation and reduce high cost of credit in the light of consistently falling inflation.

However, markets reversed their entire losses and traded flat in dying hour of trade, as traders took some support with a private report that eighteen micro finance non-banking financial companies (NBFC-MFIs) have pooled assets worth a combined Rs 835 crore for securitisation, to tide over a liquidity problem in the sector. Some comfort also came with Prime Minister Narendra Modi’s statement that his government has helped create crores of employment opportunities across sectors in the past four-and-a-half years. Traders took a note of Union minister for transport Nitin Gadkari’s statement that there is need to move towards alternative fuels such as methanol, ethanol, bio- fuels and electric as it will help to reduce reliance on fossil fuels costs less.

On the global front, Asian markets ended higher on Friday, European markets were trading in green, as a report of progress in U.S.-China trade talks stirred hopes of a deal in their tariff dispute. Back home, textile sector was in focus with Confederation of Indian Textile Industry (CITI) estimating that domestic technical textile industry will reach market potential of Rs 2,00,823 crore by 2020-21 from Rs 1,16,217 crore in FY18 with a CAGR of 20%. It pointed out that the demand for this sector is rising due to many factors including rapid urbanisation, advances in medical technology, expansion in construction sectors, awareness on safety and environmentalism and increased spending on healthcare.

The BSE Sensex ended at 36401.06, up by 26.98 points or 0.07% after trading in a range of 36218.33 and 36469.98. There were 11 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.79%, while Small cap index was down by 0.80%. (Provisional)

The few gaining sectoral indices on the BSE were Energy up by 2.70%, Oil & Gas up by 0.28% and IT up by 0.25%, while Telecom down by 3.80%, Healthcare down by 1.94%, Realty down by 1.54%, Capital Goods down by 1.41% and Industrials down by 1.08% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 4.37%, Kotak Mahindra Bank up by 1.55%, HCL Tech. up by 1.34%, Asian Paints up by 0.90% and ONGC up by 0.72%. (Provisional)

On the flip side, Sun Pharma down by 8.46%, Bharti Airtel down by 6.42%, Larsen & Toubro down by 1.87%, Axis Bank down by 1.49% and Yes Bank down by 1.32% were the top losers. (Provisional)

Meanwhile, India Ratings and Research (Ind-Ra), a Fitch Group company, in its latest report has stated that India’s Gross Domestic Product (GDP) growth is likely to grow a tad higher at 7.5% in 2019-20 (FY20) on account of steady improvement in major sectors -- industry and services. After demonetisation and Goods and Services Tax (GST), the agency had expected 2018-19 to be a year of quick recovery and, indeed, the recovery has been sharp with GDP growth coming in at 7.2%.

The rating agency further said GDP growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the US dollar, among other factors. However, GDP growth in 2019-20 will be more dispersed and evenly balanced across sectors as well as demand-side growth drivers.

Over the past few years, private final consumption expenditure and government final consumption expenditure have been the primary growth drivers of Indian economic growth. Ind-Ra believes that investments are slowly but steadily gaining traction, with gross fixed capital formation growing 12.2% in the current fiscal and projected to clock 10.3% in the next year.

Ind-Ra added that this is certainly a comforting development, but the flip side of this development is that it is primarily driven by the government capex (capital expenditure), as incremental private corporate capex has yet to revive. It further said that due to the slowdown in private corporate and household capex, GDP growth has failed to accelerate and sustain itself close to or in excess of 8%.

The CNX Nifty is currently trading at 10907.35, up by 2.15 points or 0.02% after trading in a range of 10852.20 and 10928.20. There were 15 stocks advancing against 35 stocks declining on the index. (Provisional)

The top gainers on Nifty were Reliance Industries up by 4.53%, Wipro up by 3.41%, Kotak Mahindra Bank up by 1.66%, Hindalco up by 1.43% and HCL Tech. up by 1.39%. (Provisional)

On the flip side, Sun Pharma down by 8.39%, Bharti Airtel down by 6.54%, GAIL India down by 3.28%, HPCL down by 2.03% and Larsen & Toubro down by 2.01% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 69.21 points or 1.01% to 6,904.13, France’s CAC increased 58.51 points or 1.22% to 4,852.88 and Germany’s DAX was up by 118.22 points or 1.08% to 11,036.84.

Asian markets ended higher on Friday as reports of progress in US-China trade talks as well as stronger than expected economic data from the US helped ease global growth worries. Chinese shares ended higher ahead of China's fourth-quarter GDP data, due on Monday. Further, Japanese shares closed higher as the yen weakened on improved risk appetite after reports that the US could lift trade tariffs on China. On economic front, Japan’s overall consumer prices were up 0.3% on year in December, the Ministry of Internal Affairs and Communications said on Friday, down from 0.8% in November. Core consumer prices - which exclude volatiles prices of food - were up an annual 0.7%. That was down from 0.9% in the previous month. On a monthly basis, overall inflation was down 0.2% and core CPI eased 0.1%.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,596.01
36.37
1.42

Hang Seng

27,090.81
335.18
1.25

Jakarta Composite

6,448.16
24.38
0.38

KLSE Composite

1,692.22

9.25

0.55

Nikkei 225

20,666.07
263.80
1.29

Straits Times

3,224.34
9.90
0.31

KOSPI Composite

2,124.28
17.22
0.82

Taiwan Weighted

9,836.06
46.91
0.48


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