Markets laud Interim Budget 2019; soar half a percent

Indian equity benchmarks lauded the Interim Budget 2019 on Friday, with Sensex and Nifty closing the trading session with the gains of over half a per cent each. The start of the day was positive, as the government revised India’s gross domestic product (GDP) growth rate upwards by 50 basis points to 7.2 per cent from 6.7 per cent for fiscal 2017-18 and by 110 basis points to 8.2 per cent from 7.1 per cent for 2016-17. Adding enthusiasm among the market participants, the Finance Ministry said that revenue collection from Goods and Services Tax (GST) in the month of January 2019 surpassed Rs 1 lakh crore-mark, after a gap of 2 months. It noted that this has been a significant improvement over collection of Rs 94,725 crore during December 2018 and Rs 89,825 crore during the same month last year. Sentiments remained upbeat, aided by rising manufacturing PMI data. The Indian manufacturing sector surged in the month of January, with the quickest increase in order books. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 53.9 in January from 53.2 in December. The manufacturing sector activity expanded for the 18th consecutive month as the PMI reading stood above the watershed 50 mark, which differentiates growth from contraction.

The markets extended their gains in noon deals, as Finance Minister Piyush Goyal started presenting the budget in the Parliament. Goyal said that India has emerged as the brightest spot in the world in the last five years during which the country witnessed the fastest GDP growth higher than under any previous governments. Separately, the Finance Minister proposed higher allocation for MNREGA by 9 percent to Rs 60,000 crore for the financial year 2019-20, as a part of the NDA government's larger plan to focus specifically on the country's rural sector, amid concerns over rising agrarian crisis. However, in the last leg of the trade, the key indices pared some their gains, amid reports that the growth of eight core infrastructure industries slowed down to 2.6 percent in December 2018, on account of negative growth in expansion of crude oil, refinery products and fertilisers. According to data released by the ministry of Commerce and Industry, the combined Index of eight core industries stood at 132.1 in December, 2018.

On the global front, European markets were trading mixed, after Eurozone manufacturing sector moved closer to stagnation in January amid a modest gain in output and a sharp fall in new orders. The survey data from IHS Markit showed that the final Eurozone manufacturing Purchasing Managers' Index dropped to 50.5, in line with the flash estimate, from 51.4 in December. The manufacturing PMI has now fallen for six consecutive months to reach its lowest level since November 2014. Asian markets ended mixed, as the manufacturing sector in Taiwan continued to contract in January, and at a faster pace. The latest survey from Nikkei revealed with a manufacturing PMI score of 47.5. That's down from 47.7 in December, and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction. Individually, there were sharper falls in output and new business at the start of 2019.

Back home, aviation sector stocks ended mixed, even after Finance Minister Piyush Goyal announced that domestic Air traffic doubled in last 5 years. Stocks related to the auto industry caught speed on the back of positive January sales data. Ashok Leyland reported a rise of 9% in January 2019 sales to 19741 units, as against 18100 units sold in the same month of last year, while Mahindra & Mahindra (M&M) reported auto sales performance for January 2019 which stood at 55,722 vehicles, compared to 52,063 vehicles during January 2018, a growth of 7%. Further, agri stocks also shined after Finance Minister Piyush Goyal announced that farmers owing up to 2 hectares to get Rs 6000 per year, Small and marginal farmers to get Rs 6,000 per year as direct transfer and all 22 crops have been put under Minimum Support Price.

Finally, the BSE Sensex gained 212.74 points or 0.59% to 36,469.43, while the CNX Nifty was up by 62.70 points or 0.58% to 10,893.65.

The BSE Sensex touched a high and a low of 36,778.14 and 36,221.32, respectively and there were 23 stocks advancing against 08 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.56%, while Small cap index was up by 0.17%.

The top gaining sectoral indices on the BSE were Auto up by 2.65%, Consumer Disc up by 1.77%, Realty up by 1.33%, FMCG up by 1.14% and IT up by 1.11%, while Metal down by 3.80%, Basic Materials down by 1.76%, Bankex down by 1.04% and PSU down by 0.84% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 7.48%, Maruti Suzuki up by 4.96%, HCL Tech. up by 3.86%, Asian Paints up by 3.14% and Bajaj Finance up by 2.23%. On the flip side, Vedanta down by 17.82%, Yes Bank down by 4.45%, SBI down by 3.09%, ICICI Bank down by 2.68% and Axis Bank down by 0.91% were the top losers.

Meanwhile, the Finance Ministry has said that revenue collection from Goods and Services Tax (GST) in the month of January 2019 surpassed Rs 1 lakh crore-mark, after a gap of 2 months. It noted that this has been a significant improvement over collection of Rs 94,725 crore during December 2018 and Rs 89,825 crore during the same month last year.

The ministry stated that this increase has been achieved despite various tax relief measures implemented by the GST Council to lower the tax burden on the consumers. It said that this is the third time in current fiscal that GST collections have crossed the Rs 1 lakh crore-mark. It also said that previously in April and October, the collections had surpassed this milestone. It further indicated that GST collection stood at Rs 1.03 lakh crore in April, Rs 94,016 crore in May, Rs 95,610 crore in June, Rs 96,483 crore in July, Rs 93,960 crore in August, Rs 94,442 crore in September, Rs 1,00,710 crore in October, Rs 97,637 crore in November and Rs 94,725 crore in December 2018.

The government's GST collection target is set at over Rs 13 lakh crore for the financial year 2018-19, which can be achieved if the average monthly mop up is around Rs 1 lakh crore, as compared with Rs 89,885 crore in 2017-18. Till now (April-January), the government has collected Rs 9.71 lakh crore revenue from GST.

The CNX Nifty traded in a range of 10,983.45 and 10,813.45. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 7.54%, Maruti Suzuki up by 4.35%, HCL Tech. up by 3.62%, Eicher Motors up by 3.60% and Dr Reddy’s up by 3.32%. On the flip side, Vedanta down by 18.12%, Zee Entertainment down by 7.26%, Yes Bank down by 4.53%, SBI down by 3.76% and ICICI Bank down by 3.05% were the top losers.

European markets were trading mixed; UK’s FTSE 100 increased 32.75 points or 0.47% to 7,001.60 and France’s CAC was up by 0.80 points or 0.02% to 4,993.52, while Germany’s DAX was down by 2.90 points or 0.03% to 11,170.20.

Asian markets ended mixed on Friday as weak manufacturing data from China as well as lingering trade tensions offset upbeat corporate earnings results from the US. The two-day US-China trade talks ended without anything concrete results, though US President Donald Trump said the trade dispute would hopefully be resolved before the March 1 deadline. Investors also awaited cues from the latest US jobs report due later in the day. Street expects employment to rise by 165,000 jobs in January after an addition of 312,000 jobs in December. The jobless rate is expected to hold at 3.9 percent. Japanese shares ended marginally higher as investors digested mixed economic readings. While Japan's manufacturing activity grew at its slowest pace in 29 months in January, the jobless rate unexpectedly fell to 2.4 percent in December from 2.5 percent the month before. Chinese shares ended higher even as weak data reinforced investor concerns of a slowdown in the world's second-largest economy.  A private survey showed that China's factory activity continued to weaken last month, providing the latest evidence of a prolonged economic slowdown. The Caixin/Markit PMI dropped to 48.3 in January from 49.7 in the previous month. Meanwhile, markets in Malaysia and Taiwan were closed for Federal Territory Day and the Lunar New Year holidays, respectively.