Post Session: Quick Review

Extending previous session’s southward journey, Indian equity benchmarks ended the lackluster day of trade marginally in red on Thursday. Domestic bourses made a cautious start and traded with marginal losses, tracking feeble global cues and a weak Indian rupee. The sentiments remained in lackadaisical mood with Credit rating agency Moody’s Investors Service report highlighting that there are risks of India breaching the 3.3% fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures. Investors’ sentiments continued to remain pessimistic with the Reserve Bank of India (RBI) reiterating concerns over rising inflationary pressures this fiscal year due to global and domestic pressures and called for continuous vigil to keep them at bay. However, the markets managed to pare most of their early losses in dying hour of trade as traders found some solace with Finance Minister Arun Jaitley’s statement that India is expected to surpass Britain next year to become world's fifth largest economy.

On the global front, Asian markets end mostly lower on Thursday. European markets were trading in red in early deals, as investors continued to monitor global trade talks and corporate earnings. Back home, banking stocks were in focus with the RBI’s report that bad loans for the banking sector are likely to increase in 2018-19 from the current levels of around 11.5%.

The BSE Sensex ended at 38707.65, down by 15.28 points or 0.04% after trading in a range of 38581.83 and 38819.06. There were 15 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.49%, while Small cap index up by 0.31%.(Provisional)

The top gaining sectoral indices on the BSE were Utilities up by 1.40%, Telecom up by 1.23%, FMCG up by 1.18%, Metal up by 1.01% and Healthcare up by 0.98%, while Energy down by 0.94%, Auto down by 0.42%, Consumer Disc down by 0.30%, Bankex down by 0.25% and Capital Goods down by 0.19% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 3.25%, Tata Steel up by 2.52%, ITC up by 2.19%, NTPC up by 1.99% and Bharti Airtel up by 1.88%. (Provisional)

On the flip side, Maruti Suzuki down by 1.86%, Indusind Bank down by 1.61%, Reliance Industries down by 1.43%, Tata Motors - DVR down by 1.21% and Yes Bank down by 1.15% were the top losers. (Provisional)

Meanwhile, with pick up in industrial activity and good monsoon, the Reserve Bank of India (RBI) in its annual report has said that it expects India’s gross domestic product (GDP) growth rate to accelerate to 7.4% in the current financial year (FY19) from 6.7% in the previous year, with risks evenly balanced. RBI also said that its monetary policy will continue to be guided by the objective of achieving the medium-term target for retail inflation of 4%, within a tolerance band of +/- 2%, while supporting growth. However, it cautioned that the country’s external sector will have to confront global headwinds, but expressed confidence that the Current Account Deficit would largely be financed by foreign direct investment.

The annual report noted that agricultural production is likely to remain strong, growth impulses in industry are strengthening (propelled by a sustained pick-up in manufacturing and mining activity), corporate are reporting robust sales growth and improvement in profitability, and services sector activity is also set to gather pace. Also, revenue-earning freight traffic of railways has picked up, driven by stepped-up movement in coal, fertiliser and cement. It said over the rest of 2018-19, the acceleration of growth that commenced in 2017-18:H2 is expected to be consolidated and built upon.

The central bank further said the up-tick in credit growth is likely to be supported by the progress being made under the aegis of the Insolvency and Bankruptcy Code (IBC) in addressing stress on balance sheets of both corporates and banks, recapitalisation of state-owned banks, and a positive outlook on the economy. The prevailing negative credit-to-GDP gap indicates that there is sufficient scope for credit absorption and expansion in bank lending on a sustained basis.

On the inflation front, RBI said it is likely to face upside risks over the rest of the year from a number of sources, warranting continuous vigil and a readiness to head off those pressures from getting generalised. Rising global commodity prices, especially of crude oil, and recent global financial market developments are firming up input cost pressures. The RBI has cautioned that global headwinds are likely to confront India’s external sector in 2018-19. Even though exports have gathered momentum in Q1FY19, the worsening global trade environment as a result of protectionist policies may impinge upon external demand. Elevated crude oil prices and the strengthening of domestic demand may push up the import bill.

The CNX Nifty ended at 11684.90, down by 7.00 points or 0.06% after trading in a range of 11639.70 and 11698.80. There were 24 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were Sun Pharma up by 3.28%, Tata Steel up by 2.46%, ITC up by 2.38%, NTPC up by 2.26% and UPL up by 2.24%. (Provisional)

On the flip side, Eicher Motors down by 2.09%, Bajaj Finance down by 1.99%, Maruti Suzuki down by 1.87%, HPCL down by 1.80% and HCL Tech down by 1.63% were the top losers. (Provisional)

European markets were trading in red; France’s CAC shed 22.91 points or 0.42% to 5,478.09, Germany’s DAX was down by 126.96 points or 1.02% to 12,434.72 and UK’s FTSE 100 fell 44.75 points or 0.60% to 7,518.46.

Asian equity markets ended mostly lower on Thursday, as worries about the escalating Washington-Beijing trade war overshadowed investors’ optimism about the NAFTA trade talks. Chinese shares ended lower as trade fears lingered and investors awaited cues from manufacturing data due Friday. Meanwhile, Japanese shares gave up initial gains to end on a flat note. Retail sales in Japan rose a seasonally adjusted 0.1 percent sequentially in July, a government report showed today. That missed expectations for an increase of 0.2 percent. On an annual basis, retail sales climbed 1.5 percent - exceeding expectations for 1.2 percent and down from 1.8 percent in the previous month.