Benchmarks start last day of 2018 on optimistic note

Indian equity benchmarks made an optimistic start and are trading in fine fettle on last trading day of the year 2018, tracking firm trade in Asian peers amid easing of US-China trade tensions. Sentiments remained upbeat with the Confederation of Indian Industry’s (CII) statement that the country is expected to witness strong economic growth in 2019, after it has emerged as the fastest growing major world economy this year despite growing global vulnerabilities. It added that better demand conditions, settled GST implementation, capacity expansion from growing investments in infrastructure, continuing positive effects of reform policies and improved credit offtake especially in the services sector at 24% will sustain the robust GDP growth of 7.5% in 2019. Some support also came in with the government’s statement that the net direct tax collection till December 20 this fiscal amounted to Rs 7.36 lakh crore, a growth of 14% over the same period a year ago. This is 64% of the Budget estimate for direct tax collection in the current fiscal.

On the global front, most of the Asian counters remained shut for Lunar New Year. The Asian markets which remain opened are trading in green at this point of time as hints of progress on the Sino-US trade standoff provided a rare glimmer of optimism in what has been a rough year-end for equities globally. The US markets ended mostly lower on Friday as a still-unresolved government shutdown remains as an overhang for markets.

Back home, banking sector stocks remained in focus with the Reserve Bank of India’s (RBI) data showing that banks have seen a significant improvement in recovery of stressed assets helped by the Insolvency and Bankruptcy Code (IBC) and amendments in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, during FY18. In the fiscal ended March 2018, banks recovered Rs 404 billion worth of bad loans as against Rs 385 billion recovered in FY17. Jewellery related stocks showed some glitters with ICRA’s report that gold jewellery demand is likely to grow 6-7% over the medium to long-term aided by evolving lifestyle, growing disposable income and the increasing penetration of organised sector.

The BSE Sensex is currently trading at 36205.42, up by 128.70 points or 0.36% after trading in a range of 36110.55 and 36285.46. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.58%, while Small cap index was up by 0.53%.

The top gaining sectoral indices on the BSE were Metal up by 1.51%, Realty up by 0.92%, Consumer Durables up by 0.84%, Basic Materials up by 0.74% and Telecom was up by 0.66%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Tata Motors up by 1.76%, Tata Steel up by 1.57%, Tata Motors - DVR up by 1.41%, Vedanta up by 1.18% and Sun Pharma up by 0.89%. On the flip side, Kotak Mahindra Bank down by 0.47%, Power Grid Corporation down by 0.30%, ONGC down by 0.30% and HDFC down by 0.06% were the top losers.

Meanwhile, after India emerged as the fastest growing major world economy this year despite growing global vulnerabilities, the Confederation of Indian Industry (CII), in its ‘Growth Outlook for 2019’ report, has stated that the country will witness strong economic growth in 2019. It added that the positive outlook is buttressed by strong drivers emanating from services sector and better demand conditions arising out of poll spend, with the general elections slated next year. It highlighted that better demand conditions, settled Goods and Services Tax (GST) implementation, capacity expansion from growing investments in infrastructure, continuing positive effects of reform policies and improved credit offtake especially in the services sector at 24% will sustain the robust Gross Domestic Product (GDP) growth at around 7.5% in 2019.

The chamber pointed out that despite 2018 being filled with external vulnerabilities arising out of rising oil prices, trade wars between major global trading partners and US monetary tightening, India outshined as the world's fastest growing major economy. It has identified seven key drivers for growth that need to be fostered and suggested policy actions for robust GDP growth to continue in 2019. Among key growth drivers, CII hopes the GST Council will consider extending the tax to currently exempted sectors such as fuel, real estate, electricity and alcohol.

CII outlined that credit availability has been a challenge, particularly for the micro, small and medium enterprises, as credit flow to industry grew by a mere 2.3% in first half of the current financial year. Besides, the process of insolvency resolution has taken shape, the chamber feels the government should consider setting up additional benches of the National Company Law Tribunal to strengthen the judicial infrastructure for easier and faster exit of distressed businesses.

The industry body further said the government will continue to place high priority on simplifying business procedures in 2019, especially in terms of working with states for grassroots improvements. On agriculture reforms, CII suggested that it is important to persuade states to implement the Agriculture Produce and Livestock Marketing Model Act, which has been implemented in just four states, to strengthen agriculture produce marketing.

The CNX Nifty is currently trading at 10900.10, up by 40.20 points or 0.37% after trading in a range of 10872.35 and 10923.55. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.13%, Indiabulls Housing up by 2.03%, JSW Steel up by 2.01%, Tata Steel up by 1.96% and Tata Motors up by 1.58%. On the flip side, Cipla down by 0.41%, Bharti Infratel down by 0.30%, ONGC down by 0.27%, HPCL down by 0.23% and HDFC down by 0.20% were the top losers.

Most of the Asian markets remained shut for the trade today; Straits Times increased 12.73 points or 0.42% to 3,066.16 and Hang Seng was up by 341.50 points or 1.34% to 25,845.70.