Post Session: Quick Review

Tuesday’s trading session turned out to be extremely sanguine for local equity markets, which going from strength to strength, concluded near day’s highest point, as lower inflation figures gave way to expectations of an ease in the monetary policy by the Reserve Bank of India in its February policy review. The market indices snapped a three-session losing run, with Nifty and Sensex ending just shy of 10,900 and 36,350 marks respectively. Domestic stock markets started session on a strong note, tracking positive cues from other Asian markets. Local investors also cheered apex industry body ASSOCHAM’s statement that Wholesale Price Index (WPI) has recorded 3.80 per cent for December 2018 as compared to 4.64 per cent for the previous month due to sharp decline in price of vegetables, onion and fruits. The continuing deceleration in the growth of WPI and softening of global fuel prices provide ample opportunity to MPC (monetary policy committee) to cut down policy rate at earliest which will kick start investment and revival in overall industrial growth.

Key indices continued their rally mood to reach at fresh intraday high points in last leg of trade, taking support from report that India is likely be a larger economy than the US by 2030, while China will top the list and Indonesia will figure among the top five. India will likely be the main mover, with its trend growth accelerating to 7.8% by 2020s, partly due to ongoing reforms, including introduction of GST and the Insolvency and Bankruptcy Code (IBC). The mood remained upbeat with a report that the total of investments during 2018 by private equity (PE) and venture capital (VC) companies was $35.1 billion (nearly Rs 2.5 trillion), surpassing the previous high of $26.1 billion (Rs 1.8 trillion) in 2017 by 35 per cent. The report further said that start-ups rebounded in 2018, attracting $6.4 billion (Rs 45,000 crore) or 83 per cent higher than in 2017.

On the global front, Asian markets ended higher on Tuesday, while European markets were trading in green, on reports that Beijing will cut taxes and keep monetary policy flexible to help weather China's slowdown. Back home, Airline stocks such as Jet Airways and SpiceJet ended higher after Ministry of Civil Aviation secretary, RN Choubey stating that India will be adding 100 more airports, and one billion trips in the next 15 years. He also said the country is an aviation locomotive for the world and provides humongous opportunities for players across the globe to grow. Besides, Auto stocks were in limelight, as automobile industry body SIAM said that vehicle manufacturers are staring at production stoppage if there is no resolution of the issues over restrictions imposed on domestic manufacturers using imported steel.

The BSE Sensex ended at 36340.76, up by 487.20 points or 1.36% after trading in a range of 35950.08 and 36346.86. There were 29 stocks advancing against 2 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.57%, while Small cap index was up by 0.69%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 3.20%, TECK up by 2.92%, Energy up by 2.55%, Oil & Gas up by 1.76% and Metal up by 1.74%, while there were no losers on the BSE sectoral front. (Provisional)

The top gainers on the Sensex were Infosys up by 4.01%, Yes Bank up by 3.81%, Vedanta up by 3.24%, Reliance Industries up by 2.99% and TCS up by 2.81%. (Provisional)

On the flip side, Maruti Suzuki down by 0.76% and Power Grid down by 0.16% were the top losers. (Provisional)

Meanwhile, in order to boost growth, Former chief economic advisor Kaushik Basu has said the Reserve Bank of India (RBI) could slightly reduce interest rate. He underlined ‘Non-performing assets (NPAs) have made the banks cautious. However, India can do with slightly lower rate of interest’.  The RBI's monetary policy review is slated in February.

He further stated that the RBI should be left alone with complete autonomy. Moreover, he said that the investment rate in India was on the decline. Talking about the Goods and Services Tax (GST), he stated it was borrowed from advanced countries and ‘poorly implemented’, and demonetisation was a ‘bad idea’.

Besides, the RBI in its last monetary policy review, which held in December 2018,  had kept repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50%, in line with expectations, taking into account easing global crude prices, benign inflation and moderation in economic growth. This was for the second time in a row that the central bank maintained status quo. Consequently, the reverse repo rate under the LAF stood at 6.25%.

The CNX Nifty ended at 10884.20, up by 146.60 points or 1.37% after trading in a range of 10777.55 and 10896.95. There were 47 stocks advancing against 3 stocks declining on the index. (Provisional)

The top gainers on Nifty were Wipro up by 5.36%, Tech Mahindra up by 4.08%, Yes Bank up by 3.92%, Infosys up by 3.86% and Reliance Industries up by 3.11%. (Provisional)

On the flip side, Maruti Suzuki down by 0.81%, Bharti Infratel down by 0.11% and Power Grid down by 0.10% were the top losers. (Provisional)

European markets were trading in green, UK’s FTSE 100 increased 23.65 points or 0.35% to 6,878.67, France’s CAC was up by 21.39 points or 0.45% to 4,784.14 and Germany’s DAX rose 41.06 points or 0.38% to 10,896.97.

Asian markets ended higher on Tuesday after the US earnings season began on a positive note and China signaled more supportive measures in the near term to counter slowing growth. Investors also looked ahead to the vote on British Prime Minister Theresa May's Brexit deal later in the day. It is widely expected that May's Brexit proposal will face a certain defeat in parliament. Chinese shares ended higher after China said it would aim to achieve ‘a good start’ in the first quarter for the economy. Further, Japanese shares climbed to close near one-month high as the yen dropped against the dollar, helping exporters' shares.