Equity benchmarks extend gains

The Indian equity benchmarks extended their gains in late morning session. Investors took some encouragement with a report stating that India’s economy is forecast to grow at 7.2 per cent in 2018 and private investment in India is expected to revive as the corporate sector adjusts to Goods and Services Tax (GST), infrastructure spending increases and corporate and bank balance sheets improve with government support. The report also stated that India’s economic growth was pushed downwards in 2017 due to GST and protracted issues of corporate and bank balance sheet problems but a gradual recovery is expected. Traders shrugged off a report which stated that India slipped to the 6th position globally in the business optimism index for the first quarter of this year. The business sentiment in India has been the weakest since 2014 in the first quarter, the report also stated that the confidence has been shaken since the third quarter of 2017 with weakening currency and a surge in oil prices. 

On the global front, Asian markets were trading mixed. Investors took note of a private report stating that China’s April exports rose 12.9 percent from a year earlier, rebounding from a drop in March, while imports grew 21.5 percent, both growing much faster than expected despite worries over an escalating trade dispute with the United States. That left the country with a trade surplus of $28.78 billion for the month. 

Back on domestic turf, FMCG stocks remained sluggish despite a report from CRISIL which stated that a revival in rural demand may help boost the topline growth of the Rs 3.4-trillion fast moving consumer goods (FMCG) sector by 300-400 basis points to 11-12 per cent this financial year. In scrip specific development, Tata Motors advanced with arm reporting retail sales of 45,180 units in April 2018 p 11.9% year-on-year. Besides, Jubilant Foodworks strengthened on reporting over 10 fold jump in Q4 net profit.

The BSE Sensex is currently trading at 35256.35, up by 40.03 points or 0.11% after trading in a range of 35134.20 and 35296.45. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.40%, while Small cap index was up by 0.13%.

The top gaining sectoral indices on the BSE were IT up by 0.71%, Consumer Durables up by 0.65%, Metal up by 0.61%, TECK up by 0.60% and Telecom was up by 0.53%, while Oil & Gas down by 1.02%, PSU down by 0.81%, Energy down by 0.66%, Utilities down by 0.26% and Power was down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.13%, Tata Motors - DVR up by 2.95%, Asian Paints up by 1.20%, Tata Steel up by 1.18% and Yes Bank was up by 0.98%. On the flip side, SBI down by 1.26%, Mahindra & Mahindra down by 0.99%, HDFC down by 0.73%, Maruti Suzuki down by 0.53% and ICICI Bank was down by 0.47% were the top losers.

Meanwhile, credit ratings agency, Crisil Ratings in its latest report has said that India’s fast moving consumer goods (FMCG) sector is likely to post a net revenue growth of 11-12 percent in fiscal 2019, up 300-400 basis points compared with 8 percent in fiscal 2018, on the back of a revival in rural demand and new product launches. It noted that this will lead to a significant improvement in the operating performance of FMCG companies and benefit their credit profiles.

The ratings agency has stated that the rural economy may get a leg-up from the government’s decision of increasing the minimum support price (MSP) for pulses, oil seeds and paddy for the upcoming kharif season. Besides, a favourable monsoon rainfalls and a more non-agriculture rural employment, will increase the disposable income of the farmers and consumption demand. From the marketers’ side, it said that continuing product launches and greater acceptance of ayurvedic and herbal products will also help. Therefore, it pointed out that revenue growth from the rural segment which contributes 40-45 percent of the total income of the sector, will improve to 15-16 percent in fiscal 2019 compared to 10 percent estimated for fiscal 2018.

According to the report, growth had recovered partially from the 5-percentage point range during fiscals 2016 and 2017, a period that saw sluggish rural demand resulting from weak monsoons, intense competition and demonetisation. On the other hand, it noted that revenue growth from the urban segment is likely to stay steady at 8 percent in FY19. It also said that while mid-sized and medium-sized firms will have an edge because of better operating efficiencies in the GST regime and may clip at 15-17 percent, large firms are seen growing topline by 300-400 bps to 11-12 percent.

The CNX Nifty is currently trading at 10722.05, up by 4.25 points or 0.04% after trading in a range of 10689.85 and 10734.10. There were 23 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 3.24%, Titan Company up by 2.21%, Bharti Infratel up by 1.62%, Tech Mahindra up by 1.29% and Tata Steel was up by 1.27%. On the flip side, BPCL down by 3.46%, HPCL down by 3.27%, Indian Oil Corporation down by 2.70%, Ultratech Cement down by 2.47% and SBI was down by 1.38% were the top losers.

Asian markets were trading mixed, Taiwan Weighted gained 11.97 points or 0.11% to 10,703.35, Jakarta Composite surged 45.56 points or 0.79% to 5,820.28 and Hang Seng was down by 108.82 points or 0.36% to 30,511.63.

On the other hand, Nikkei 225 slipped 91.48 points or 0.41% to 22,417.21, Shanghai Composite lost 9.02 points or 0.29% to 3,152.48 and KOSPI Index down by 1.85 points or 0.08% to 2,447.96.