Benchmarks make an optimistic start on firm global cues

Buoyed by firm global cues, Indian equity benchmarks made an optimistic start and are trading jubilantly in early deals on Wednesday. Key gauges recaptured their crucial 10,200 (Nifty) and 33,200 (Sensex) levels, ahead to interest-rate announcements from the Federal Reserve and the Bank of England. Traders shrugged off report that a private investment bank has downgraded India’s economic forecasts from 8 per cent to 7.6 per cent for Financial Year 2018-19. It, however, retained growth forecast for FY 2019-20 at 8.3 per cent. The investment bank lowered the growth projection in the wake of multi-billion banking scam and warned that it could spark tighter regulation of the banking sector that would constrain credit growth. Traders also ignored former governor of Reserve Bank of India Raghuram Rajan’s statement that India should be thinking of the next 10 to 20 years when it would need a massive push to create jobs. He said, 7.5 percent growth is not enough to employ the 12 million people coming to the labor force every year in good jobs.

Global cues remained supportive with Asian markets rallying at this point of time following modest rebounds in Europe and the U.S. that partially reversed Monday’s global declines. However, gains remained capped as traders remained on sidelines ahead of the outcome of US Federal Reserve policy meeting. The US markets closed higher on Tuesday amid expectations the Federal Reserve and new Chair Jerome Powell will soothe investors’ concerns that interest rates will rise too fast.

Back home, sugar stocks remained in limelight after the government scrapped export duty on raw and refined sugar to boost shipments, as the country is all set to produce record 29.5 million tonnes (MT) of the sweetener in the current 2017-18 marketing season. Export duty on sugar was 20%. In scrip specific developments, Raymond gained on planning to raise Rs 100 crore through NCDs and Mercator surged on inking agreement to sell its vessel ‘Vrinda’ for $4.25 million.

The BSE Sensex is currently trading at 33265.71, up by 268.95 points or 0.82% after trading in a range of 33090.82 and 33267.82. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 1.10%, while Small cap index was up by 1.22%.

The top gaining sectoral indices on the BSE were Telecom up by 1.77%, Realty up by 1.68%, Oil & Gas up by 1.34%, PSU up by 1.32% and Energy was up by 1.07%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Bharti Airtel up by 2.81%, SBI up by 1.75%, ONGC up by 1.72%, Axis Bank up by 1.56% and Maruti Suzuki up by 1.37%. On the flip side, Hindustan Unilever down by 0.45%, Hero MotoCorp down by 0.38% and Wipro down by 0.29% were the top losers.

Meanwhile, raising concerns over employment generation in the country, the former Reserve Bank of India’s (RBI) Governor Raghuram Rajan has said that India can move up from the 7.5% growth but that is not enough to create employment for about 12 million people coming into the labour market every year. He explained that the country’s growth can move up to maybe 10%, provide some kind of source of demand for the work. He also observed that India can do that but there is need to work on it.

On the reforms in the country, Rajan said that they are happening but more slowly than one would wish and that’s potentially the cost of getting political agreement. Noting that the world has become less receptive to exports, he said, ‘So if India becomes a manufacturing giant overnight, who’s going to buy its stuff? So, India needs to think about its pathway of growth, it will be different from China’s.’

On how quickly India can achieve 10% growth, former RBI Governor said that could happen after the general elections next year because reforms would now be put off. He added that reforms are likely to be put on the shelf till the next general elections but expressed hope that the country will move up to a higher plane of growth thereafter. The next general elections are scheduled in early 2019.

The CNX Nifty is currently trading at 10209.35, up by 85.00 points or 0.84% after trading in a range of 10173.20 and 10209.60. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing up by 3.52%, Bharti Airtel up by 2.73%, Axis Bank up by 1.93%, Ultratech Cement up by 1.87% and SBI up by 1.83%. On the flip side, Tech Mahindra down by 0.91%, Bharti Infratel down by 0.72%, Eicher Motors down by 0.69%, Bosch down by 0.54% and Hero MotoCorp down by 0.47% were the top losers.

All the Asian markets are trading in green; KOSPI Index rose 1.25 points or 0.05% to 2,486.77, FTSE Bursa Malaysia KLCI increased 4.92 points or 0.27% to 1,861.31, Shanghai Composite gained 15.64 points or 0.48% to 3,306.28, Taiwan Weighted advanced 23.67 points or 0.21% to 11,034.51, Jakarta Composite added 40.34 points or 0.65% to 6,283.92 and Hang Seng was up by 381.12 points or 1.21% to 31,931.05.