Strong GDP data takes benchmarks higher in early deals

Indian equity benchmarks made a positive start and are trading in fine fettle in early deals with frontline gauges conquering their crucial 38,700 (Sensex) and 11,700 (Nifty) levels. Sentiments remained upbeat with  report that India’s economy grew at its fastest in over two years, propelled by double-digit growth in manufacturing and robust consumer spending, making for a strong start to the last financial year before the ruling party faces polls in 2019. Gross domestic product (GDP) expanded quicker than even the most optimistic forecast at 8.2% in the First quarter of current financial year (Q1FY19). GDP had grown 5.6% in the year earlier quarter and 7.7% in the March quarter. Traders also took some encouragement with Principal Economic Adviser in the Ministry of Finance, Sanjeev Sanyal’s statement that the growth rate will be affected in next reading, but India would remain world’s fastest-growing major economy, as he countered scepticism over GDP growth rate.

On the global front, Asian markets are trading in red terrain at this point of time, on worries about further escalation of the US China trade war and unstable emerging market currencies. The US markets closed slightly higher on Friday after President Donald Trump warned that he could pull the United States out of the World Trade Organization.

Back home, banking stocks edged lower despite Union Minister Ravi Shankar Prasad’s statement that the operations of the India Post Payments Bank (IPPB) will strengthen the financial inclusion programme in India and make country’s village systems stronger. In scrip specific developments, Wipro surged on wining $1.5 billion deal from Alight Solutions and Bajaj Auto catches speed on reporting 30% rise in August sales.

The BSE Sensex is currently trading at 38,764.92, up by 119.85 points or 0.31% after trading in a range of 38671.33 and 38934.35. There were 21 stocks advancing against 9 stocks declining on the index, while 1 stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index gained 0.49%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were IT up by 1.15%, TECK up by 1.03%, Consumer Durables up by 0.95%, Capital Goods up by 0.93% and Healthcare was up by 0.91%, while Realty down by 1.73%, Energy down by 0.22%, Bankex down by 0.15% and Oil & Gas was down by 0.04% were the few losing indices on BSE.

The top gainers on the Sensex were Wipro up by 5.40%, Bajaj Auto up by 2.10%, Infosys up by 1.72%, Tata Motors - DVR up by 1.69% and Tata Motors up by 1.57%. On the flip side, ICICI Bank down by 1.11%, Maruti Suzuki down by 0.68%, Hindustan Unilever down by 0.57%, Reliance Industries down by 0.45% and Axis Bank down by 0.42% were the top losers.

Meanwhile, with the help of solid expansion in manufacturing and farm sectors, India’s economic growth accelerated to a 15-quarter high of 8.2% during the first quarter (April-June) of the fiscal year 2018-19, as compared to growth rate of 5.59% in the first quarter of the previous financial year (2017-18) and 7.7% in the last quarter (Q4FY18). The growth, which surpassed the street estimates, cemented India’s position as the fastest growing major economy, clocking higher expansion rate than China’s 6.7% in the same quarter. The previous high quarterly GDP growth was recorded in July-September period in 2014-15 at 8.4%.

As per the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation data, Gross Domestic Product (GDP) at constant (2011-12) prices in Q1 of 2018-19 is estimated at Rs 33.74 lakh crore, as against Rs 31.18 lakh crore in Q1 of 2017-18, showing a growth rate of 8.2%. Quarterly GVA at basic price at constant (2011-2012) prices for Q1 of 2018-19 is estimated at Rs 31.63 lakh crore, as against Rs 29.29 lakh crore in Q1 of 2017-18, showing a growth rate of 8.0% over the corresponding quarter of previous year. GDP at current prices in Q1 of 2018-19 is estimated at Rs 44.33 lakh crore, as against Rs 38.97 lakh crore in Q1 of 2017-18, showing a growth rate of 13.8%. GVA at Basic Price at current prices in Q1 of 2018-19, is estimated at Rs 41.02 lakh crore, as against Rs 36.34 lakh crore in Q1, 2017-18, showing an increase of 12.9%.

According to the data, manufacturing, electricity, gas, water supply & other utility services, construction and public administration, defence and other services registered a growth more than 7%. Manufacturing grew at a nine-quarter high of 13.5% largely owing to a low base effect, while the services sector expanded at a slower pace. Similarly, construction, whose growth had plummeted to 1.8 per cent in Q1FY18, rose to a healthy 8.7 per cent in Q1FY19. Agriculture and allied activities also registered an impressive 5.3 per cent growth rate in Q1FY19, up from 4.5 per cent in Q4FY18, on the back of a surge in production. The growth in the ‘mining and quarrying’, ‘Trade, hotels, transport, communication and services related to broadcasting’ and financial, real estate and professional services is estimated to be 0.1%, 6.7%, and 6.5% respectively, during this period.

Besides, Union Finance Minister Arun Jaitley said that GDP growth rate of 8.2% GDP growth in the first quarter of the current fiscal represented the potential of a ‘New India’ in an environment of global turmoil. He added ‘Reforms and fiscal prudence are serving us well. India is witnessing an expansion of the neo middle class.’ Meanwhile, Economic Affairs Secretary Subhash Chandra Garg stated that Indian economy has completed its recovery process and will exceed 7.5% growth rate in fiscal 2018-19. He said that the 8.2% growth indicates that the economy was now on a very steady high growth rate.

The CNX Nifty is currently trading at 11,708.60, up by 28.10 points or 0.24% after trading in a range of 11680.65 and 11751.80. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Wipro up by 5.63%, Lupin up by 2.50%, Bajaj Auto up by 2.08%, Eicher Motors up by 1.74% and Dr. Reddys Lab up by 1.65%. On the flip side, Bajaj Finance down by 1.08%, ICICI Bank down by 1.02%, Ultratech Cement down by 0.99%, Maruti Suzuki down by 0.68% and Reliance Industries down by 0.61% were the top losers.

Asian markets are trading in red; Nikkei 225 declined 145.33 points or 0.64% to 22,719.82, Taiwan Weighted dropped 92.07 points or 0.84% to 10,971.87, Straits Times decreased 12.33 points or 0.39% to 3,201.15, Jakarta Composite shed 31.11 points or 0.52% to 5,987.35, Hang Seng tumbled 264.63 points or 0.96% to 27,623.92, KOSPI fell 15.91 points or 0.69% to 2,306.97 and Shanghai Composite was down by 25.59 points or 0.95% to 2,699.66.