Benchmarks trade slightly in green in early deals

Indian equity benchmarks are trading slightly in green in early deals as traders opted to buy beaten down but fundamentally strong stocks. However, gains remained capped as traders remained cautious with the International Monetary Fund (IMF), in its World Economic Outlook (WEO), retained economic growth projection for India at 7.3% for 2018-19 (FY19), lower than the government’s and the Reserve Bank of India’s (RBI) forecasts. Though, this is noteworthy as the IMF cut global growth projections by 0.2 percentage points. The IMF wants the RBI to tighten monetary conditions, something which it did not do in the October policy review. Besides, Oil Minister Dharmendra Pradhan said there was no question of going back on deregulation of fuel pricing despite the government asking state owned firms to subsidise petrol and diesel by Re 1 per litre.

On the global front, Asian markets are trading mostly in green at this point of time, as traders went for bargain hunting after a sluggish start. Though, gains remained capped as investors fretted about everything from the Chinese economy, to trade wars, higher US bond yields and political dysfunction in Europe. The US markets ended mostly lower on Monday, tracking global stocks, in the backdrop of growing unease over effects of the Sino-US trade war on global growth and with Treasury yields at multi-year highs.

Back home, stocks related to gems and jewellery sector edged lower with the Gems and Jewellery Export Promotion Council (GJEPC) data showing that the country’s gems and jewellery exports contracted by 0.75% to $13.18 billion in April-August this fiscal as demand slowed down in major developed markets. In scrip specific developments, Coal India gained on inking MoU with NLC India and SpiceJet flied high on launching daily flights on Delhi-Kishangarh route.

The BSE Sensex is currently trading at 34516.09, up by 41.71 points or 0.12% after trading in a range of 34394.32 and 34711.68. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.25%, while Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.03%, Metal up by 0.79%, Healthcare up by 0.62%, Utilities up by 0.37% and Basic Materials was up by 0.32%, while Consumer Durables down by 0.93%, Realty down by 0.76%, IT down by 0.67%, Auto down by 0.60% and TECK was down by 0.55% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 4.57%, Adani Ports up by 2.79%, HDFC up by 2.22%, Larsen & Toubro up by 1.51% and Vedanta was up by 1.18%. On the flip side, Tata Motors down by 4.75%, Tata Motors - DVR down by 4.63%, Asian Paints down by 1.59%, Wipro down by 1.52% and Bharti Airtel was down by 1.42% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its latest World Economic Outlook (WEO) report has retained India’s economic growth forecast at 7.3% for the current year 2018. Though, it is lower than the government and the Reserve Bank of India’s (RBI) forecasts. However, IMF lowered the country’s growth projections by 0.1 percentage points to 7.4% for 2019, given the recent increase in oil prices and the tightening of global financial conditions. In 2017, India had clocked growth rate of 6.7%.

The world body said that this acceleration reflected a rebound from transitory shocks (the currency exchange initiative and implementation of the national Goods and Services Tax), with strengthening investment and robust private consumption. As per the report, India's medium-term growth prospects remained strong at 7.75%, benefiting from ongoing structural reform, but have been marked down by just under half a percentage point relative to the April 2018 WEO. If projections are true, then India would regain the tag of fastest growing major economies of the world, crossing China with more than 0.7 percentage point in 2018 and an impressive 1.2 percentage point growth lead in 2019.

The IMF noted that in India important reforms have been implemented in the recent years, including the Goods and Services Tax (GST), the inflation-targeting framework, the Insolvency and Bankruptcy Code, and steps to liberalise foreign investment and make it easier to do business. Looking ahead, renewed impetus to reform labour and land markets, along with further improvements to the business climate, are also crucial. According to the World Economic Outlook, in India, reform priorities include reviving bank credit and enhancing the efficiency of credit provision by accelerating the cleanup of bank and corporate balance sheets and improving the governance of public sector banks. In India, a high interest burden and risks from rising yields require continued focus on debt reduction to establish policy credibility and build buffers. These efforts should be supported by further reductions in subsidies and enhanced compliance with the GST.

Moreover, the IMF has downgraded the international growth projections for both this year and next to 3.7%, 0.2 percentage points below its last assessments and the same rate achieved in 2017. The growth rate of United States for 2018 is 2.9% and that of 2019 has been powered to 2.5%. As per the report, in China growth is projected to moderate from 6.9% in 2017 to 6.6% in 2018 and 6.2% in 2019, reflecting a slowing external demand growth and necessary financial regulatory tightening.

The CNX Nifty is currently trading at 10352.05, up by 4.00 points or 0.04% after trading in a range of 10319.70 and 10397.60. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 4.18%, Adani Ports up by 2.74%, HDFC up by 2.45%, Zee Entertainment up by 2.04% and Bajaj Finance up by 1.56%. On the flip side, Tata Motors down by 4.78%, Eicher Motors down by 2.46%, BPCL down by 2.00%, HCL Tech down by 1.89% and Titan Co down by 1.81% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted gained 30.13 points or 0.29% to 10,486.06, Jakarta Composite rose 5.37 points or 0.09% to 5,766.44, Hang Seng jumped 109.40 points or 0.42% to 26,311.97 and Shanghai Composite was up by 13.29 points or 0.49% to 2,729.80.

On the flip side, Nikkei 225 decreased 311.57 points or 1.33% to 23,472.15 and Straits Times was down by 12.59 points or 0.4% to 3,168.86.