Benchmarks trade in fine fettle in early deals

Indian equity benchmarks made an optimistic start and are trading in fine fettle in early deals on Friday, as oil prices eased on expectations of a gradual increase in output from Russia and other large producers. Traders took encouragement with Care Ratings’ report forecasting the country’s GDP growth to accelerate to 7.5 per cent this financial year, from 6.6 per cent in the last fiscal, on better performance from the industrial and agricultural sectors. Headline inflation, lending rates, fiscal prudence, current account deficit (CAD) and exchange rates, however, are the areas of concern. Some support also came with NITI Aayog vice chairman Rajiv Kumar’s statement that states have the capacity and must reduce the duty on petrol, while the Centre should create fiscal space to deal with the impact of spurt in oil prices. The rising crude prices in the international market prompted state-owned oil companies to raise domestic prices for 11th day in a row. Petrol costs Rs 77.47 a litre in Delhi and diesel Rs 68.53 a litre.

On the global front, Asian markets are exhibiting mixed trend at this point of time following overnight news that U.S. President Donald Trump cancelled a scheduled summit with Kim Jong Un. The US markets ended lower on Thursday, following news President Donald Trump has called off the historic summit with North Korean leader Kim Jong Un. The president attributed the decision to call off the meeting to North Korea displaying tremendous anger and open hostility.

Back home, Maharashtra Chief Minister Devendra Fadnavis has said that fuel prices will come down once the Centre builds a consensus to bring petrol and diesel under the Goods and Services Tax (GST). In scrip specific developments, Reliance Capital gained on raising funds through issue of NCDs, JMC Projects surged on getting nod to raise funds upto Rs 150 crore and Gayatri Projects was up on bagging contact worth Rs 425 crore.

The BSE Sensex is currently trading at 34812.75, up by 149.64 points or 0.43% after trading in a range of 34700.52 and 34853.14. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.56%, while Small cap index was up by 0.59%.

The top gaining sectoral indices on the BSE were IT up by 1.32%, TECK up by 1.22%, Utilities up by 1.16%, Power up by 0.80% and Telecom was up by 0.73%, while FMCG down by 0.41% and Healthcare was down by 0.06% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.25%, TCS up by 1.70%, NTPC up by 1.54%, Infosys up by 1.37% and Bharti Airtel up by 1.29%. On the flip side, ITC down by 1.58%, Tata Motors - DVR down by 1.31%, SBI down by 0.89%, Sun Pharma down by 0.60% and Adani Ports down by 0.59% were the top losers.

Meanwhile, credit rating agency, Care Ratings in its latest report titled ‘Indian Economy Prognosis: 2018-19’ has forecasted that India’s gross domestic product (GDP) growth will accelerate to 7.5% in 2018-19, from 6.6% in the last fiscal. It added that the growth will be dependent on favorable monsoon, pick up in investment and increased private sector spending supported by continued government spending. However, it pointed out some areas of concern that are headline inflation, lending rates, fiscal prudence, current account deficit (CAD) and exchange rates.

The rating agency estimated that CAD will widen up to 2.5% of GDP for FY19, from the 1.7% for the first nine months of FY18, due to wider trade deficit, an estimated slowdown in the portfolio flows and increased oil prices. It also expects that farm sector growth to inch up to 4%, from the 3% in the year-ago period, and industrial output growth to go up to 6%, from 4.3% in the previous year. Besides, it noticed that meeting the wider 3.3% target on the fiscal deficit will be difficult and adherence will depend on achievement of the Rs 80,000 crore divestment target, goods and services tax (GST) collections and tax receipts. 

On the inflation front, the report said that the consumer price inflation will go up to 5.5% for the fiscal, from the 3.6% in FY18, which may result in rate hikes of up to 0.50% by the inflation-focused Reserve Bank of India during the year. For the banking sector, it said that it will have an ‘upward bias’ with credit growth estimated to increase to 12% and deposits to expand by 10% and added that non-performing assets (NPAs) will be a major challenge for lenders.

Care Ratings has said that the estimates in the report have been made assuming that crude oil does not spiral over the present $80 per barrel and settles down at up to $75. It also said that the exchange rate will slip further to the 67-68 levels against the US dollar by the end of FY19 and added that the reserves will grow marginally to $435 billion, from $425 billion at present.

The CNX Nifty is currently trading at 10559.85, up by 46.00 points or 0.44% after trading in a range of 10524.00 and 10573.10. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.62%, Indian Oil up by 2.37%, Tata Steel up by 2.23%, Hindalco up by 2.03% and TCS up by 1.69%. On the flip side, Vedanta down by 3.11%, ITC down by 1.62%, Bharti Infratel down by 1.16%, Cipla down by 1.09% and SBI down by 0.86% were the top losers.

Asian markets are trading mixed; FTSE Bursa Malaysia KLCI surged 17.81 points or 1% to 1,793.47, Jakarta Composite gained 33.5 points or 0.56% to 5,980.04, Taiwan Weighted rose 37.68 points or 0.34% to 10,974.61 and Nikkei 225 up by 52.62 points or 0.23% to 22,489.63.

On the flip side, Hang Seng decreased 79.29 points or 0.26% to 30,681.12, KOSPI Index slipped 3.49 points or 0.14% to 2,462.52, Shanghai Composite shed 2.31 points or 0.07% to 3,152.35 and Straits Times down by 0.79 points or 0.02% to 3,528.13.