Benchmarks trade with traction in early deals

Indian equity benchmarks made a gap-up opening and are trading with traction in early deals on Wednesday with frontline gauges recapturing their crucial 36,100 (Sensex) and 10,850 (Nifty) levels. Sentiments remained upbeat with the World Bank’s forecast that India’s Gross Domestic Product (GDP) is expected to grow at 7.3% in the fiscal year 2018-19, and 7.5% in the following two years. It said the growth is attributed to an upswing in consumption and investment. The bank said India will continue to be the fastest growing major economy in the world. Some support also came with the finance ministry’s statement that the recovery of evaded indirect taxes shot up in 2018-19, after a low in 2017-18, the year when the goods and services tax (GST) was implemented. Recovery as a percentage of the evaded taxes dropped from 26% in 2016-17 to 14% in 2017-18. Then, it went up to 29% in 2018-19 (April to December period).

Global cues too remained supportive with all the Asian counters trading in green at this point of time supported by optimism the United States and China can strike a trade deal to avoid an all-out confrontation that will severely disrupt the global economy. The US markets ended considerably higher on Tuesday on signs of progress between the US and China on trade negotiations.

Back home, power sector stocks edged higher with report that power plants across the country generated 1,047.3 billion units (BU) of electricity in April-December, 2018, registering a 6.7% year-on-year (y-o-y) growth. Gems and jewellery sector stocks remained in focus with a private report indicating that India’s gold imports have declined by 14.5% in 2018 to 759 tonnes from 876 tonnes the previous year. The reasons are sluggish demand, changes in regulations such as alteration of criteria for nominated agencies to import gold and the ban on export of 24 carat jewellery to stop misuse.

The BSE Sensex is currently trading at 36190.55, up by 209.62 points or 0.58% after trading in a range of 36151.35 and 36250.54. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.32%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were IT up by 1.41%, TECK up by 1.13%, FMCG up by 0.64%, Auto up by 0.56% and Healthcare was up by 0.56%, while Metal down by 0.49%, Telecom down by 0.49%, Basic Materials down by 0.12%, PSU down by 0.11% and Oil & Gas was down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.37%, Axis Bank up by 1.81%, TCS up by 1.11%, Tata Motors up by 1.06% and Maruti Suzuki up by 0.97%. On the flip side, Tata Steel down by 1.41%, Yes Bank down by 0.83%, Hero MotoCorp down by 0.50%, Bajaj Auto down by 0.43% and HCL Tech down by 0.42% were the top losers.

Meanwhile, with investment picking up and consumption remaining strong, the World Bank has forecasted that Indian economy is expected to grow at 7.3% in the current fiscal year 2018-19 (FY19) and will grow further at average 7.5% in the following two years. It also said that India registered quite a bit of pick up in doing business ranking. It added that the country’s growth outlook is still robust and will continue to be the fastest growing major economy in the world.

According to the January 2019 Global Economic Prospects report of World Bank, the growth in India has accelerated driven by an upswing in consumption, and investment growth has firmed as the effects of temporary factors wane. Domestic demand has strengthened as the benefits of structural reforms such as the Goods and Services Tax (GST) harmonisation and bank recapitalisation take effect. It further said private consumption is projected to remain robust and investment growth is expected to continue as the benefits of recent policy reforms begin to materialise and credit rebounds.

The report also said that strong domestic demand is envisioned to widen the current account deficit of 2.6% of GDP next year. Inflation is projected to rise somewhat above the midpoint of Reserve Bank of India’s range of 2-6%, mainly owing to energy and food prices. It said in India the recent introduction of the GST and steps toward demonetisation are expected to encourage a shift from the informal to the formal sector. It noted that growth performance of India as compared to other emerging markets has been quite impressive and year after year it has delivered strong numbers around its potential growth.

The CNX Nifty is currently trading at 10861.50, up by 59.35 points or 0.55% after trading in a range of 10848.60 and 10870.40. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.57%, Axis Bank up by 2.10%, Eicher Motors up by 1.46%, Tech Mahindra up by 1.37% and TCS up by 1.18%. On the flip side, Bharti Infratel down by 1.93%, Tata Steel down by 1.72%, Yes Bank down by 0.86%, Zee Entertainment down by 0.83% and HPCL down by 0.73% were the top losers.

All the Asian markets are trading in green; Nikkei 225 surged 272.97 points or 1.35% to 20,477.01, Straits Times gained 31.42 points or 1.01% to 3,154.36, Hang Seng soared 636.61 points or 2.46% to 26,512.06, Taiwan Weighted jumped 161.59 points or 1.69% to 9,725.19, KOSPI advanced 38.73 points or 1.91% to 2,064.00, Jakarta Composite rose 31.60 points or 0.50% to 6,294.45 and Shanghai Composite was up by 40.20 points or 1.59% to 2,566.66.