Markets manage to trade above water in early deals

Indian equity benchmarks pared most of their initial gains but managed to keep their head above water in morning deals, as traders took some encouragement with rating agency ICRA’s report that revenues of Indian corporates have grown by 22% in the June quarter from a year ago. It added that the increase in revenues has been attributed to the strong growth in both consumer-based industries such as consumer goods, and auto; and commodity sectors such as cement, iron, steel, and oil and gas. However, gains remained capped with president of the International Economic Association, and former chief economist at the World Bank, Kaushik Basu’s statement that in the event of US-China currency war there will be a sideline effect on India and a depreciation of the rupee, which, if managed well by policymakers, will be good for the country.

Global cues aided some support with Asian markets trading mostly in green at this point of time, following positive Wall Street lead, but gains remained capped with worries over the US-China trade conflict. The US markets ended higher Monday, as investors continued to focus on healthy corporate earnings, instead of the escalating trade threats the US and China made last week.

Back home, steel sector stocks gained sheen with India Ratings and Research’s (Ind-Ra) statement that there is a moderate risk of global trade war with domino effect due to US trade restrictions on steel imports but rebounding steel margins could help domestic steel companies withstand the challenges. Stocks related to auto component sector are exhibiting mixed trend with report highlighting that auto component industry sought uniform 18 percent GST across the sector stating that low taxation would lead to better compliance and larger tax base.

The BSE Sensex is currently trading at 37696.72, up by 4.83 points or 0.01% after trading in a range of 37686.47 and 37876.87. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.11%, while Small cap index was up by 0.09%.

The top gaining sectoral indices on the BSE were Metal up by 1.47%, Basic Materials up by 0.89%, Consumer Discretionary Goods & Services up by 0.38%, Auto up by 0.36% and Capital Goods was up by 0.20%, while Power down by 0.35%, Telecom down by 0.31%, Energy down by 0.26%, Consumer Durables down by 0.24% and Utilities was down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.19%, Axis Bank up by 1.66%, Asian Paints up by 1.26%, Coal India up by 1.20% and Tata Steel was up by 1.01%. On the flip side, Adani Ports down by 3.02%, Bharti Airtel down by 1.11%, Power Grid down by 0.87%, TCS down by 0.57% and Reliance Industries was down by 0.48% were the top losers.

Meanwhile, Former chief economic advisor, Kaushik Basu has said that in the event of US-China currency war there will be a sideline effect on India and a depreciation of the rupee, which, if managed well by policymakers, will be good for the country. He also said that the rupee is over-valued and the fair value of the local currency is 70-71 to a greenback. He added that the widening current account deficit (CAD) and higher interest rates have made the rupee the worst among its Asian peers so far this year.

He said ‘Our exchange rate has tended to appreciate in the past couple of years as we are inflating faster than the industrialised countries. Barring the correction that has taken place in the past few months, the rupee has been appreciating. The right level for the rupee is 70-71 to the dollar.’

Basu also said that India’s method of computing its ease of doing business ranking was not entirely accurate. He further said of the 30 places jump, more than half was due to change in criteria of World Bank’s calculation and added that a part of the jump in rankings was also because of the measure India has undertaken.

Kaushik Basu , the former chief economist of the World Bank, also raised concerns over the jobs market saying the poor employment growth is a matter of concern. Jobs data is very poor in the country. A part of it is legitimate as so much of work is very different work from what one get in the West.

The CNX Nifty is currently trading at 11388.85, up by 1.75 points or 0.02% after trading in a range of 11387.30 and 11428.95. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.41%, Vedanta up by 2.05%, Axis Bank up by 1.66%, Zee Entertainment up by 1.64% and Ultratech Cement was up by 1.32%. On the flip side, Adani Ports down by 3.01%, Lupin down by 1.39%, Bharti Airtel down by 1.08%, Cipla down by 0.96% and Power Grid was down by 0.82% were the top losers.

Asian markets are trading mostly in green, Straits Times advanced 52.63 points or 1.58% to 3,337.97, KOSPI surged 6.30 points or 0.27% to 2,292.80, Nikkei 225 gained 151.01 points or 0.67% to 22,658.33, Hang Seng rose 267.46 points or 0.95% to 28,087.02 and Shanghai Composite was up by 38.55 points or 1.41% to 2,743.71.

On the flip side, Jakarta Composite declined 19.21 points or 0.32% to 6,081.92 and Taiwan Weighted was down by 23.04 points or 0.21% to 11,001.06.