Post Session: Quick Review

Thursday’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, aided by short-covering ahead of F&O expiry and expectation of something good in the Interim Budget. Trading for the day began on a firm note, tracking strong gains in Asian peers. Traders took encouragement with SBI Research’s report that the government meeting the fiscal targets this year and for FY20, fiscal deficit is likely to be Rs 6.72 trillion or 3.2 percent of GDP, assuming a modest 11.7 percent of nominal GDP growth. It added that for FY19 the fiscal gap will be met at the budgeted 3.3 percent. The mood remained upbeat with Commerce Minister Suresh Prabhu’s statement that the government will release the new e-commerce policy soon which is awaiting approval from the Department of Industrial Policy and Promotion (DIPP).

Key indices continued their rally mood to reach at fresh intraday high points in last leg of trade, taking support from a report that the GST officials are working out mechanism to prompt taxmen to initiate profiteering complaints, which could be taken up for further investigation by the Directorate General of Anti-Profiteering. Local sentiments also got buttressed with Reserve Bank of India’s report that foreign borrowing of Indian companies nearly trebled from the year-ago period to $3.81 billion in December 2018. Of the total fundraising during last month, $3.77 billion was mobilised through external commercial borrowings (ECBs) in the foreign markets, while $37.04 million was through rupee-denominated bonds (RDBs). Investors paid no heed towards the National Sample Survey Office’s (NSSO) latest report showing that India's unemployment rate reached to 6.1% in 2017-18, hitting a 45-year high. The rate was the highest since 1972-73.

On the global front, Asian markets ended mostly higher on Thursday, while European markets were trading in green, after the US Federal Reserve left interest rates unchanged, as widely expected, and said it would be patient in lifting borrowing costs. Back home, textiles sector stocks ended higher with India Ratings’ report that India's textiles sector may see higher growth following robust domestic demand and depreciating rupee value. It has maintained a stable outlook for the textile sector for 2019-20 following strong domestic demand, waning impact of the disruptions due to GST and demonetisation and rising exports aided by a weak rupee.

The BSE Sensex ended at 36245.63, up by 654.38 points or 1.84% after trading in a range of 35740.07 and 36278.13. There were 26 stocks advancing against 5 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.38%, while Small cap index up by 0.73%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 2.14%, Energy up by 2.10%, TECK up by 1.89%, Bankex up by 1.70% and Oil & Gas up by 1.57%, while there were no losing indices on BSE sectoral front.(Provisional)

The top gainers on the Sensex were Axis Bank up by 4.94%, Infosys up by 3.46%, Tata Motors up by 3.38%, Tata Motors - DVR up by 3.10% and Reliance Industries up by 2.61%. (Provisional)

On the flip side, Yes Bank down by 2.61%, HCL Tech. down by 1.19%, Bajaj Finance down by 0.85%, Coal India down by 0.29% and ICICI Bank down by 0.27% were the top losers. (Provisional)

Meanwhile, SBI Research in its latest report has stated that the government is likely to meet the fiscal deficit target this year and pegged fiscal deficit at Rs 6.72 trillion or 3.2% of gross domestic product (GDP) for next fiscal year (2019-20), assuming a moderate nominal GDP growth of 11.7%. It added that the fiscal gap will be met at the budgeted 3.3 percent for FY19.

The report noted that the government’s gross market borrowing will be Rs 6.50 trillion in FY20, while net market borrowing to be at Rs 4.13 trillion, less than FY19 estimate of Rs 4.20 trillion. in order to keep the redemptions in check, the report estimates switching of securities worth around Rs 30,000-35,000 crore, which would bring in gross borrowing near the FY19 budgeted target of Rs 6.05 trillion. It is also expecting minimum buybacks in FY20 as the government may be carrying forward a minimal cash balance into FY20. The government has also dipped into small savings scheme to meet a part of its expenditure in FY19. As against the budgeted amount of Rs 75,000 crore (revised later to Rs 1 trillion), borrowings through small savings have reached Rs 45,396 crore by November 2018.

SBI Research said a large funding through the National Small Savings Fund (NSSF) is possible owing to interest gap between bank deposits and the small saving rates. The gap between the small saving interest rate (average of PPF and Sukanya Samridhi accounts rates) and average term deposit of year maturity being offered by banks still remains around 98 basis points. However, this may make it difficult for banks to reduce deposit rates. In the past few months, with deposit growth significantly lagging credit growth, banks have been increasing deposit rates to avoid deposit flight.

The CNX Nifty ended at 10830.60, up by 178.80 points or 1.68% after trading in a range of 10678.55 and 10838.05. There were 41 stocks advancing against 9 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 4.88%, Infosys up by 3.32%, Titan Co up by 3.00%, Tata Motors up by 2.98% and Bajaj Auto up by 2.81%. (Provisional)

On the flip side, Yes Bank down by 2.51%, Bajaj Finserv down by 2.48%, Zee Entertainment down by 2.38%, Indiabulls Housing Finance down by 1.33% and HCL Tech. down by 1.12% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 45.59 points or 0.66% to 6,987.22, France’s CAC was up by 15.76 points or 0.32% to 4,990.52 and Germany’s DAX added 17.96 points or 0.16% to 11,199.62.

Asian markets ended mostly higher on Thursday after the US Federal Reserve left interest rates unchanged, as widely expected, and said it would be patient in lifting borrowing costs. Japanese shares ended sharply higher after the Fed sounded more dovish than expected and said risks to the outlook are roughly balanced. Further, Chinese shares ended higher even as data showed the country's manufacturing activity contracted for the second consecutive month in January. Activity in China's vast manufacturing sector continued to contract in January, albeit at a slower pace, the latest survey from the National Bureau of Statistics showed with a PMI score of 49.5. That beat expectations for a score of 49.3 and was up from 49.4 in December. The non-manufacturing index came in at 54.7, topping forecasts for 53.9 and up from 53.8 in the previous month.