Post Session: Quick Review

Indian equity benchmarks ended Tuesday’s trade on a lower note with losses of over half a percent, as investors remained on the sidelines ahead of corporate results and weakening global cues. Sensex and Nifty settled below their crucial 34,300 and 10,300 levels, respectively. The markets opened in green and traded with small gains, as traders took some support with Union Home Minister Rajnath Singh’s statement that India will be among the top three economies of the world by 2030 if it kept up its current pace of growth. Soon traders turned 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. Traders also took note of Oil Minister Dharmendra Pradhan’s statement that 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.

In the final hour of trade, key indices once again entered into green terrain and managed to keep their head above water, as traders found solace with a report stating that India is all set to emerge as the 11th wealthiest country in the world as its personal financial wealth is projected to grow by 13% to $5 trillion by 2022 from the current $3 trillion. However, markets were unable to hold on to the gains for long as some anxiety remained among the investors with credit rating agency CRISIL’s latest report that farmers’ income remain low in calendar year 2018, despite normal rainfall.  Some concerns also came with another report showing that India is one of the most vulnerable countries for extreme weather events.

On the global front, Asian markets ended mostly lower on Tuesday, as ongoing US-China tensions simmer. European markets were trading in red, amid simmering tensions between Italy and the European Union (EU) over the former's 2019 budget. Back home, stocks related to gems and jewellery sector ended 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. Defence sector was in focus with the Department of Defence Production under the Ministry of Defence clearing 31 projects and giving them in-principle approval under the Make-II scheme.

The BSE Sensex ended at 34271.84, down by 202.54 points or 0.59% after trading in a range of 34233.50 and 34711.68. There were 14 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.16%, while Small cap index was down by 0.44%. (Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 1.13%, Metal up by 0.78%, TECK up by 0.41% and IT up by 0.35%, while Consumer Durables down by 4.05%, Auto down by 2.66%, Oil & Gas down by 2.10%, Energy down by 1.96% and FMCG down by 1.77% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Adani Ports & SEZ up by 4.03%, HDFC up by 2.39%, Vedanta up by 2.20%, Tata Steel up by 1.96% and Yes Bank up by 1.72%. (Provisional)

On the flip side, Tata Motors down by 13.33%, Tata Motors - DVR down by 12.17%, Asian Paints down by 3.72%, Maruti Suzuki down by 3.38% and Hindustan Unilever down by 2.78% were the top losers. (Provisional)

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 ended at 10291.80, down by 56.25 points or 0.54% after trading in a range of 10279.35 and 10397.60. There were 25 stocks advancing against 25 stocks declining on the index.(Provisional)

The top gainers on Nifty were Dr. Reddys Lab up by 5.01%, Zee Entertainment up by 4.66%, Bajaj Finance up by 4.36%, Adani Ports & SEZ up by 4.21% and Vedanta up by 2.61%. (Provisional)

On the flip side, Tata Motors down by 13.09%, Titan Co down by 7.93%, HPCL down by 4.32%, Eicher Motors down by 4.22% and Asian Paints down by 3.56% were the top losers.(Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 17.94 points or 0.25% to 7,215.39, France’s CAC was down by 14.31 points or 0.27% to 5,285.94 and Germany’s DAX shed 54.78 points or 0.46% to 11,892.38.

Asian markets ended mostly lower on Tuesday as investors fretted about the impact of rising interest rates, US-China tensions and Italy's decision to expand budget deficits. The trade war between China and the United States may intensify after China allowed its currency to slip past a psychological bulwark. The International Monetary Fund has lowered its forecast for Chinese economic growth in 2019 to 6.2 percent from 6.4 percent, citing the ‘negative effect of recent tariff actions’. Japanese shares ended lower as a firm yen added to investors’ worries over China and rising US bond yields. Though, Chinese shares finished modestly higher amid bets that policymakers will increase policy support to counter the negative impact of an escalating trade war on Chinese exporters. Meanwhile, the South Korean markets were closed for a public holiday.