Benchmarks continue firm trade in morning session

Indian equity benchmarks continued their firm trade in the morning session on account of buying in frontline blue chip counters amid positive global trends, despite weak economic growth data for the June quarter. The rupee opened lower against dollar on account of buying of American currency by banks and importers. Foreign Portfolio Investors stood net buyers in domestic equity markets on Thursday and bought shares worth Rs 98.22 crore with gross purchases and gross sales of Rs 4222.48 crore and Rs 4124.26 crore, respectively. Traders took support after Finance Minister Arun Jaitley put private sector debtors on notice, saying they will have to pay their dues to banks or others will step in and take control of the businesses. The minister also defended demonetization, declaring that its impact was along expected lines and the economy will benefit from it in the medium and long term. Jaitley attributed the lower GDP numbers to pre-GST destocking of goods and expressed hope that the economy will grow at 7 percent, saying manufacturing has bottomed out. Separately, Chief Statistician of India T C A Anant said that the slowdown in GDP growth for the first quarter of 2017-18 to 5.7 percent was due to de-stocking by firms as caution ahead of the GST roll-out on July 1. The Chief Statistician said there was a likely revival from the second quarter onwards as subsequently stocks would be restored to normal levels as GST progressed.

Investors shrugged off the weak Gross Domestic Product (GDP) numbers which came at a dismal 5.70 percent against 7.90 percent in the same quarter last year and a 13 quarter lowest level. According to data released by the government, quarterly GVA at basic prices for Q1FY18 from manufacturing sector grew by 1.2 per cent as compared to the growth of 10.7 per cent in Q1FY17. Moreover, industrial growth came in at around 1.60 per cent in Q1FY18 against 7.40 per cent in Q1FY17. Investors also paid no heed to eight core sectors which slowed down to 2.4 percent in July. The contraction was mainly seen in output of crude oil, refinery products, fertiliser and cement. From the RBI’s perspective, the GDP data is disappointing, but the current slowdown is largely due to GST, which should be seen as transitory. The turnaround in private services suggests that the growth cycle will head higher once the GST effects fade.

Traders were seen piling up position in Realty, Healthcare and Consumer Disc stocks, while selling was witnessed in IT, Telecom and TECK sector stocks. In scrip specific development, select telecom stocks were under pressure as the operators may be disappointed with the refusal to ease spectrum cap rules by a government panel, which believes extending the fee-payment tenure for auctioned airwaves and lowering interest rates payable on dues are enough.  Dr. Reddy’s Laboratories was trading firm after the company and Nasdaq-listed Vivus Inc. entered into settlement agreement to resolve a long-pending patent litigation related to weight management capsule Qsymia.

On the global front, Asian markets were trading mostly in green, with regional manufacturing figures aiding sentiment. South Korea’s annual inflation surged in August to its highest in more than five years as heavy rain and a summer heat-wave pushed up the price of fresh foods. Japan was seen likely to post a 37th consecutive monthly current account surplus in July, a poll found, reflecting an expected rise in income from overseas investments. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,800 and 9,950 levels respectively. The market breadth on BSE was positive in the ratio of 1476:599, while 86 scrips remained unchanged.

The BSE Sensex is currently trading at 31880.18, up by 149.69 points or 0.47% after trading in a range of 31707.27 and 31890.28. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.85%, while Small cap index was up by 0.86%.

The top gaining sectoral indices on the BSE were Realty up by 2.18%, Healthcare up by 2.08%, Consumer Disc up by 1.08%, Auto up by 0.92% and Metal up by 0.79%, while IT down by 0.18%, Telecom down by 0.07% and TECK down by 0.03% were the only losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 9.12%, Asian Paints up by 2.56%, Bajaj Auto up by 2.30%, Lupin up by 2.15% and Kotak Mahindra Bank up by 1.82%.

On the flip side, TCS down by 1.63%, Wipro down by 0.69%, HDFC down by 0.59%, Power Grid down by 0.57% and Bharti Airtel down by 0.44% were the top losers.

Meanwhile, dragged down by sluggish manufacturing, India's Gross Domestic Product (GDP) growth slowed down to a three-year low of 5.7% during the first quarter (April-June) of the fiscal year 2017-18, as against 7.9% in the corresponding period a year ago and 6.1% in the preceding quarter. This is the slowest pace of economic growth since the January-March quarter in 2014. The slowdown was induced by demonetisation coupled with the uncertainty ahead of rollout of the goods and services tax (GST).

As per the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation data, GDP at constant (2011-12) prices in Q1 of 2017-18 is estimated at Rs 31.10 lakh crore, as against Rs 29.42 lakh crore in Q1 of 2016-17, showing a growth rate of 5.7%. Quarterly GVA at basic price at constant (2011-2012) prices for Q1 of 2017-18 is estimated at Rs 29.04 lakh crore, as against Rs 27.51 lakh crore in Q1 of 2016-17, showing a growth rate of 5.6% over the corresponding quarter of previous year.

GDP at current prices in Q1 of 2017-18 was estimated at Rs 38.84 lakh crore, as against Rs 35.55 lakh crore in Q1 of 2016-17, showing a growth rate of 9.3%. GVA at Basic Price at current prices in Q1 of 2017-18, is estimated at Rs 35.77 lakh crore, as against Rs 33.17 lakh crore in Q1, 2016-17, showing an increase of 7.9%. The economic activities which registered growth of over 7% in Q1 of 2017-18 over Q1 of 2016-17 are ‘trade, hotels, transport & communication and services related to broadcasting’, ‘public administration, defence and other services’ and ‘electricity, gas, water supply & other utility services’.

According to the data, manufacturing sector crawled at 1.2% during the quarter-ended June from a 10.7% growth in the same period last year. Quarterly GVA at basic prices for Q1 2017-18 from ‘agriculture, forestry and fishing’ sector grew by 2.3% as compared to growth of 2.5% in Q1 2016-17, ‘mining and quarrying’ sector grew by (-) 0.7% as compared to growth of (-) 0.9% in Q1 2016-17, ‘Electricity, Gas, water supply and other utility services’  sector  grew by 7.0% as compared to growth of 10.3% in Q1 2016-17 and ‘Construction’ sector grew by 2.0% as compared to growth of 3.1% in Q1 2016-17.

Terming the first quarter GDP data as a matter of concern, the finance minister Arun Jaitley has said that the government requires both in policy and investment to work more to improve this figure. Stating that slowing of the economy was predominantly due to the pre-GST de-stocking and consequent decline in production, finance minister said ‘Hopefully, with the operationalisation of GST, the slowdown in manufacturing would be bottoming out.’ He further said that improvement in the global economy and good monsoon will aid GDP growth in the coming quarters which ought to be better if the country is to achieve the annual growth target.

The CNX Nifty is currently trading at 9960.90, up by 43.00 points or 0.43% after trading in a range of 9909.85 and 9963.90. There were 38 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 9.17%, Asian Paints up by 2.63%, Aurobindo Pharma up by 2.55%, Lupin up by 2.23% and Bajaj Auto up by 2.15%.

On the flip side, TCS down by 1.68%, Indian Oil down by 0.92%, Power Grid down by 0.91%, Wipro down by 0.70% and HDFC down by 0.69% were the top losers.

The Asian markets were trading mostly in green; Nikkei 225 increased 6.07 points or 0.03% to 19,652.31, Shanghai Composite increased 18.08 points or 0.54% to 3,378.89, Taiwan Weighted increased 18.84 points or 0.18% to 10,604.62 and Hang Seng increased 77.14 points or 0.28% to 28,047.44.

On the other hand, KOSPI Index decreased 0.47 points or 0.02% to 2,362.72.

Jakarta, Kuala Lumpur and Singapore Stock Exchange were closed today on account of Eid holiday.