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Markets manage to keep their head above water
Jan-18-2019

The Indian equity benchmarks saw volatility on the last trading day of the week but managed to end in green terrain with minor gains. The markets made a slightly higher opening, buoyed by India Ratings and Research’s (Ind-Ra) latest report 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. Traders were seen reacting positively towards reports that India Inc has urged the Reserve Bank of India (RBI) to cut its benchmark interest rate and lower the cash reserve ratio (CRR) to boost growth. It suggested various measures to ease tight liquidity situation and reduce high cost of credit in the light of consistently falling inflation. But soon, the key indices turned volatile to swing between gains & losses, on the back of cautiousness on the street ahead of corporate earnings results. Traders took note of RBI official’s statement that with the country's GDP size increasing in quantitative terms, there could be need for more currency in the economy.

However, in the last leg of the trade, the markets erased all of their losses to end flat with positive bias, tracking positive global markets. Domestic sentiments got relief came 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. Adding some comfort, Prime Minister Narendra Modi said that his government has helped create crores of employment opportunities across sectors in the past four-and-a-half years. Separately, Prime Minister also said that India is aiming at being in the list of top 50 countries in ease of doing business by next year. The market participants also took support with Agriculture Minister Radha Mohan Singh’s statement indicating announcement of major measures in the coming weeks to address farm distress across the country, a move that will come ahead of Lok Sabha elections.

On the global front, European markets were trading in green, as Eurozone consumer price inflation slowed in December to its lowest level in eight months. The latest figures from the statistical office Eurostat confirmed that the consumer price index rose 1.6 percent year-on-year following a 1.9 percent increase in November. The latest inflation rate was the lowest since April, when the rate was 1.3 percent. Sentiments were upbeat even though Eurozone construction output fell for a second month in November, albeit modestly, reflecting a contraction in civil engineering. As per data from the statistical office Eurostat, construction output declined a calendar and seasonally-adjusted 0.1 percent month-on-month in November, after a 1.6 percent contraction in October. Asian markets ended in green, as hopes for a thaw in the US China trade conflict helped improve investors' appetite for riskier assets. Trade tensions eased somewhat after the Wall Street Journal said the US is considering lifting tariffs on Chinese goods in an effort to calm markets and give Beijing an incentive to make deeper concessions.

Back home, agri industry stocks remained in limelight, with Union Minister of Agriculture and Farmers’ Welfare Shri Radha Mohan Singh stating that India has achieved tremendous progress in agriculture and allied sectors under Modi government and is committed to doubling farmers’ income by 2022 through a series of focused programmes, while stocks related to rubber industry remained in focus with Union minister for commerce and Industry and Civil Aviation Suresh Prabhu’s statement that the government is developing a National Rubber Policy to address various issues concerning the sector. Further, stocks related to textile sector ended mostly lower, even though 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.

Finally, the BSE Sensex gained 12.53 points or 0.03% to 36,386.61, while the CNX Nifty was up by 1.75 points or 0.02% to 10,906.95.

The BSE Sensex touched a high and a low of 36,469.98 and 36,218.33, respectively and there were 12 stocks advancing against 19 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.79%, while Small cap index was down by 0.73%.

The few gaining sectoral indices on the BSE were Energy up by 2.69%, Oil & Gas up by 0.36% and IT up by 0.14%, while Telecom down by 3.83%, Healthcare down by 2.00%, Capital Goods down by 1.42%, Realty down by 1.22% and Industrials down by 1.12% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 4.34%, Kotak Mahindra Bank up by 1.41%, HCL Tech up by 1.02%, ONGC up by 0.79% and Asian Paints up by 0.68%. On the flip side, Sun Pharma down by 8.52%, Bharti Airtel down by 6.42%, Larsen & Toubro down by 2.07%, Axis Bank down by 1.77% and Yes Bank down by 1.59% were the top losers.

Meanwhile, union minister for transport Nitin Gadkari has said 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.

Gadkari has pointed out that India’s crude oil import bill is of Rs 7 lakh crore and this cost is creating big economic problems for the country and at the same time, the use of fossil fuels are creating pollution. He also said that as there is a lot of agriculture raw material waste, there is a need to convert it into energy through waste and move towards the alternative fuels. He said “the prime minister has already declared that by 2022, we will have to reduce the import bill of crude oil by 10 percent.

The minister further said that if bio mass projects are set up in the rural areas, it will create a lot of employment and people will not have to move towards the cities. It also noted that since all these raw material needed to make the bio fuels are available in the rural areas, the social economic scenario will also change. He stated that excepting some states, the public transport is facing losses. He added “so we need to convert the public transport on to electric or to ethanol.”

The CNX Nifty traded in a range of 10,928.20 and 10,852.20. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 4.53%, Wipro up by 3.32%, Kotak Mahindra Bank up by 1.66%, Hindalco up by 1.43% and HCL Tech up by 1.39%. On the flip side, Sun Pharma down by 8.51%, Bharti Airtel down by 6.47%, GAIL India down by 3.28%, HPCL down by 2.01% and Larsen & Toubro down by 1.97% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 69.21 points or 1.01% to 6,904.13, France’s CAC added 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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