Markets continue to trade in green in early noon session

Indian markets were maintaining their gains with Sensex and Nifty comfortably holding their crucial levels of 36100 and 10850 respectively in the early noon trade. On sectoral front while all the indices were trading in green healthcare and consumer Durables have taken the lead. Also, appreciation in rupee value against the dollar added to the optimistic sentiments. Markets were getting some support a private report stating that India has been getting more foreign investment than China. In 2018, India saw more than $38 billion of inbound deals compared with China’s $32 billion, buoyed by stable fundamentals. Traders also took note of a report ICRA that Indian IT services companies may register 9-12 percent compounded annual growth rate (CAGR) between FY2018-21, as compared to CAGR of 17.1 percent experienced during 2013-17. It attributed the likely lower growth rates to the lower deal sizes in digital technologies, cloud adoption and high competitive intensity from local as well as international players.

On the global front, Asian markets were trading mostly in green, as investors heartened by Wall Street’s best performance in nine years after the White House said Fed Chair Jay Powell would not be fired. Back on street, in scrip specific development, Maruti Suzuki surged as the company is going to launch the new Wagon R in India on January 23, 2019 with prices for the new Wagon R are expected to be between Rs 4-5 lakh. On the other hand, Atlas Cycles (Haryana) slipped on reporting net loss of Rs 1.46 crore for the quarter ended September 30, 2018 against net profit of Rs 0.77 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 36132.41, up by 325.13 points or 0.91% after trading in a range of 35911.99 and 36170.57. There were 29 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.78%, while Small cap index was up by 0.78%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.29%, Consumer Durables up by 1.25%, Basic Materials up by 1.21%, Realty up by 1.11% and Bankex was up by 1.08%, while there were no losers on the sectoral indices.

The top gainers on the Sensex were Sun Pharma up by 2.91%, Yes Bank up by 2.18%, HDFC up by 1.77%, Tata Motors up by 1.63% and Vedanta was up by 1.58%. On the flip side, Coal India down by 2.84% and TCS was down by 0.03% were the only losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has warned that a loan waiver for farmers announced by various states, including Madhya Pradesh, Rajasthan and Chhattisgarh, will have an adverse impact on the combined state government spending on capital assets. It noted that States’ capital spending is a major driver of investment growth which drives the economy, and historically, it has been higher than capex undertaken by the Centre. It also indicated that states’ capex is budgeted to be higher by 37.5 percent for the financial year 2018-19. It was 36.6 percent higher as per FY18 revised estimates.

According to the report, during periods of fiscal adjustment, capex becomes the soft target for deficit control and this has been witnessed in Maharashtra, Rajasthan and Karnataka, when they announced farm loan waivers outside budget in FY18. It noted that despite mobilising revenue receipts higher than budgeted, these states could not keep revenue deficit at the budgeted level due to increased revenue expenditure caused by the farm loan waivers. It also stated that Rajasthan and Karnataka lowered their capex by 12 percent and 2.5 percent respectively to offset the increased revenue expenditure but still failed to keep fiscal deficit at the budgeted level. Although fiscal deficit of Maharashtra was lower than budgeted due to lower than budgeted capex.

Ind-Ra further highlighted that since FY01, the share of the aggregate capex of the states in the total capital expenditure done by the Centre and the states together has been in excess of 50 percent, but it fluctuated in the range of 51-65 percent till FY16 and at 67.2 percent in FY17. It noted that in fact, the share of the aggregate capex of the states has been rising since FY14, supported by the additional fund inflows due to the 14th Finance Commission award and the taking over of discom debt by several states during FY16 and FY17.

The CNX Nifty is currently trading at 10876.15, up by 96.35 points or 0.89% after trading in a range of 10817.15 and 10887.50. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 3.22%, Zee Entertainment up by 2.54%, UPL up by 2.44%, JSW Steel up by 2.42% and Yes Bank was up by 2.39%. On the flip side, Coal India down by 3.08%, Asian Paints down by 0.46%, Bharti Infratel down by 0.17%, NTPC down by 0.17% and TCS was down by 0.07% were the top losers.

Asian markets were trading in mostly in green; Taiwan Weighted strengthened 85.85 points or 0.89% to 9,727.41, Hang Seng increased 63.36 points or 0.25% to 25,542.24, Straits Times advanced 19.21 points or 0.63% to 3,063.95, KOSPI rose 16.46 points or 0.81% to 2,044.90, Jakarta Composite soared 13.33 points or 0.22% to 6,203.97 and Shanghai Composite was up by 12.76 points or 0.51% to 2,495.85

On the flip side, Nikkei 225 was down by 96.62 points or 0.48% to 19,981.00.