Benchmarks trade in fine fettle in early deals

Indian equity benchmarks made an optimistic start and are trading slightly in green in early deals as traders took some support with the SBI’s latest research report ‘Ecowrap’ stating that the country’s GDP is expected to grow by 7.7 percent in the April-June quarter on the back of pick up in leading indicators like cement production, sale of vehicles and bank credit. Some support also came with the finance ministry’s statement that the government will meet the fiscal deficit target for the current fiscal although there could be some slippages in the current account deficit (CAD) because of high crude oil prices. However, gains remain capped as traders remain little cautious with NITI Aayog Vice-Chairman Rajiv Kumar’s statement that he was more concerned about the rising trade deficit than the falling rupee, and called for efforts to push exports.

On the global front, Asian markets are trading mostly in red, as a deadline loomed for fresh US tariffs on China and amid speculation US President Donald Trump’s political position could be threatened by the legal woes of two former advisers. The US markets ended mostly in red on Wednesday, snapping four-day winning streak, after Fed minutes showed concern over wage pressures and as two days of trade talks between the US and China get underway.

Back home, banking sector stocks edged lower despite Moody’s Investors Service’s statement that the government’s plan to provide more capital support to public sector banks in current fiscal will restore capital adequacy and improve loan-loss coverage at many loss-making banks, but stress will persist. In scrip specific developments, Infosys gained on opening Technology, Innovation Hub in North Carolina and Themis Medicare edged higher with its Haridwar Plant getting EU-GMP certification.

The BSE Sensex is currently trading at 38351.79, up by 66.04 points or 0.17% after trading in a range of 38341.67 and 38487.63. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.10%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were FMCG up by 1.08%, Healthcare up by 1.00%, IT up by 0.94%, TECK up by 0.87% and Telecom was up by 0.69%, while Metal down by 0.90%, PSU down by 0.53%, Oil & Gas down by 0.50%, Basic Materials down by 0.50% and Energy was down by 0.40% were the top losing indices on BSE.

The top gainers on the Sensex were Wipro up by 1.46%, Bharti Airtel up by 1.41%, Hindustan Unilever up by 1.20%, HDFC up by 1.05% and Power Grid Corporation up by 1.01%. On the flip side, Tata Motors down by 2.81%, Tata Motors - DVR down by 2.32%, Vedanta down by 1.92%, Kotak Mahindra Bank down by 1.31% and SBI down by 0.86% were the top losers.

Meanwhile, ahead of the Central Statistics Office’s (CSO) quarterly Gross Domestic Product (GDP0 estimate release for April-June 2018, the State Bank of India (SBI) Research in its latest report has estimated that Indian economy is likely to grow by 7.7% in the Q1FY19 on the back of pick up in leading indicators like cement production, sale of vehicles and bank credit. SBI has based its assessment on its Composite Leading Indicator (CLI), which takes into account 18 major macro-economic indicators.

The research report ‘Ecowrap’ stated that the CLI is signalling that the economic activity for Q1 FY19 has picked up substantially and the Gross Value Added (GVA) growth would be 7.6%. However, it also said the headline GVA is being possibly pulled down by a weak agriculture growth. As per the report, major indicators that driving GVA in Q1 FY19 are cement production, passenger traffic, sale of both commercial vehicle and passenger vehicles, non-food credit growth and aircraft movement among others.

The SBI further said the quarterly trend of subsidy expenditure suggests that the government has been frontloading larger chunk of overall subsidy amount in the first quarter compared to other quarters and this is happening since 2016-17. In April-June 2018-19, subsidy expenditure to the tune of Rs 1,16,820 crore has been frontloaded. It said ‘We believe, by front loading subsidy amount in Q1 may have some impact on Q1 GDP figure and the gap between GDP and GVA might come down to some extent in Q1 as compared to remaining quarters in FY19’. It added in fact, a trend analysis suggests that first quarter of fiscal may even witness GDP declining below GVA or staying marginally above GVA.

The CNX Nifty is currently trading at 11582.95, up by 12.05 points or 0.10% after trading in a range of 11579.35 and 11620.70. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Lupin up by 2.46%, Dr. Reddys Lab up by 2.01%, Cipla up by 1.83%, HCL Tech up by 1.43% and Tech Mahindra up by 1.30%. On the flip side, Tata Motors down by 2.88%, BPCL down by 2.37%, Indian Oil Corporation down by 2.19%, Vedanta down by 1.69% and HPCL down by 1.44% were the top losers.

Asian markets are trading mostly in red; Jakarta Composite slipped 1.51 points or 0.03% to 5,942.79, Hang Seng decreased 200.52 points or 0.72% to 27,727.06, KOSPI shed 3.51 points or 0.15% to 2,269.82 and Shanghai Composite was down by 9.21 points or 0.34% to 2,705.40.

On the flip side, Nikkei 225 gained 41.34 points or 0.18% to 22,403.89, Taiwan Weighted increased 20.23 points or 0.19% to 10,824.43 and Straits Times was up by 46.73 points or 1.44% to 3,246.62.