Post Session: Quick Review

Indian equity benchmarks sustained their uptrend for the fourth consecutive session on Wednesday, on signs of easing US-China trade tensions and expectation of healthy Q3 corporate results. The markets traded with firm gains for most of the session, except a brief reversal in gains in afternoon trade as metal stocks weighed. Indices opened higher and continued trading on a firm note, as sentiment got a boost 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).

However, key indices erased all gains and turned into negative terrain in mid-afternoon trade, as market-men got anxious with a private report stating that the battered Indian rupee will take another bruising this year, despite a recent revival, weighed down by uncertainty around national elections in May and an expected economic slowdown. Some pessimism also spread among the investors with World Bank’s projection of moderation of global growth from 3 per cent last year to 2.9 per cent this year. It described the current situation of the world economy as ‘darkening of the skies’. ‘Global growth is slowing and risks are rising. The bank thinks that skies are darkening over the global economy’.

But, selling proved short-lived as markets bounced back in late trade, due to buying witnessed in FMCG, Banking and Realty stocks. Traders also found solace with a World Economic Forum report stating that India is poised to become the third-largest consumer market behind only the US and China; and consumer spending in India is expected to grow from $1.5 trillion at present to nearly $6 trillion by 2030.

On the global front, Asian markets ended mostly higher on Wednesday, while European markets were trading in green, supported by growing optimism that the US and China can strike a trade deal to avoid an all-out confrontation that would severely disrupt the global economy. Back home, textile sector was in focus with Confederation of Indian Textile Industry (CITI) stating that the stressed advance ratio of the textile sub-sector has been improving continuously. As per Reserve Bank of India (RBI)’s financial stability report, the ratio has improved from 23.70% in September 2017 to 18.70% in September 2018.

The BSE Sensex ended at 36218.92, up by 237.99 points or 0.66% after trading in a range of 35863.29 and 36250.54. There were 18 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.06%, while Small cap index was down by 0.20%. (Provisional)

The top gaining sectoral indices on the BSE were FMCG up by 1.06%, Bankex up by 0.75%, Realty up by 0.73%, Auto up by 0.54% and Healthcare up by 0.47%, while Oil & Gas down by 1.68%, Metal down by 1.17%, Basic Materials down by 0.94%, PSU down by 0.94% and Utilities down by 0.76% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 3.06%, Tata Motors up by 2.15%, Bharti Airtel up by 2.11%, ITC up by 2.04% and HDFC up by 1.82%. (Provisional)

On the flip side, Yes Bank down by 3.22%, Tata Steel down by 2.40%, ONGC down by 1.19%, Hero MotoCorp down by 1.14% and HCL Tech. down by 0.72% were the top losers. (Provisional)

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 ended at 10855.65, up by 53.50 points or 0.50% after trading in a range of 10749.40 and 10870.40. There were 26 stocks advancing against 23 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 3.08%, ITC up by 2.06%, HDFC up by 1.94%, UPL up by 1.85% and Tata Motors up by 1.83%. (Provisional)
On the flip side, HPCL down by 3.67%, GAIL India down by 3.47%, BPCL down by 3.38%, Yes Bank down by 3.20% and Ultratech Cement down by 2.71% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 51.15 points or 0.75% to 6,912.75, France’s CAC rose 54.76 points or 1.15% to 4,828.03 and Germany’s DAX was up by 110.96 points or 1.03% to 10,914.94.

Asian markets ended mostly higher on Wednesday, buoyed by optimism that trade talks between the United States and China are progressing. With talks getting extended to Wednesday and US President Donald Trump saying in a tweet that discussions between the world's two largest economies were ‘going very well’, investors are optimistic that a trade deal can be struck ahead of a March 1 deadline established by Trump and Chinese President Xi Jinping last month at the G-20 summit in Argentina. Beijing approved the import of five genetically modified crops on Tuesday, the first in about 18 months in a bid to boost its purchases of US grains.