Post Session: Quick Review

Buying activity which woke up in dying hour of trade mainly helped the benchmarks cut their intraday losses on Monday, with Nifty settling above crucial 10,900 mark, while Senesx ended just shy of 36,550 mark. Indian shares started on a tepid note, tracking mixed global cues. Traders remain concerned with Moody’s Investors Service’s statement that the government will find it difficult to meet the fiscal deficit target of 3.4% in 2019-20 on account of higher spending and low revenue growth. Observing that Indian government’s debt is stubbornly high as a percentage of GDP, Moody's said it could be brought down only if the Centre sticks to the fiscal consolidation path. Some cautiousness came with a report that the government has reduced the allocation for Startup India programme in the Budget 2019-20 but added more monies to the Make in India kitty. According to the budget documents, the allocation for Startup India programme has been slashed to Rs 25 crore for 2019-20 from the revised estimate of Rs 28 crore in 2018-19.

However, in the late hour of trade, benchmark indices bounced from the day's low to end on positive note, due to buying witnessed in Energy, Consumer Durables and Oil & Gas stocks. Traders took some support with Minister of State for Commerce and Industry C R Chaudhary’s statement that the e-commerce sector is expected to keep growing in the future. He also said that a better enforcement of the FDI policy on e-commerce will contribute significantly to the growth of the sector. Traders also took a note of Economic Affairs Secretary Subhash Chandra Garg’s statement that the government would start disbursing substantial amount under the ‘Pradhan Mantri Kisan Samman Nidhi’ (PM-KISAN) scheme for small farmers in February itself as beneficiary data is already in place.

On the global front, Asian markets ended mostly higher on Monday as investors were cheered by a blockbuster US jobs report last week, while trade was thin owing to the three-day Lunar New Year break. European markets were trading mostly in red, as market participants monitored another flurry of corporate earnings results. Back home, stocks related to construction equipment sector were in focus with report that the growth of construction equipment sector has hit a bumper after liquidity crisis gripped NBFCs following the IL&FS default. As per the report, the construction equipment sector was growing around 20% prior to the IL&FS crisis.

The BSE Sensex ended at 36547.83, up by 78.40 points or 0.21% after trading in a range of 36225.48 and 36622.77. There were 11 stocks advancing against 20 stocks declining on the index.(Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.91%, while Small cap index was down by 1.17%.(Provisional)

The top gaining sectoral indices on the BSE were Energy up by 2.06%, Consumer Durables up by 0.73%, Oil & Gas up by 0.36%, Bankex up by 0.13% and IT up by 0.09%, while Utilities down by 2.39%, Power down by 2.24%, Telecom down by 1.86%, Healthcare down by 1.35% and Capital Goods down by 1.28% were the top losing indices on BSE.(Provisional)

The top gainers on the Sensex were Reliance Industries up by 3.42%, ONGC up by 3.10%, Bajaj Auto up by 1.45%, Kotak Mahindra Bank up by 1.15% and TCS up by 0.90%. (Provisional)

On the flip side, Power Grid down by 3.55%, Yes Bank down by 3.26%, NTPC down by 2.21%, Sun Pharma down by 2.19% and Mahindra & Mahindra down by 2.03% were the top losers.(Provisional)

Meanwhile, with higher spending and low revenue growth, Moody's Investors Service has said that the Indian government will find it difficult to meet the fiscal deficit target of 3.4% in 2019-20 (FY20). Observing that government's debt is ‘stubbornly high’ as a percentage of Gross Domestic Product (GDP), Moody's said it could be brought down only if the Centre sticks to the fiscal consolidation path. Deviating from the path laid down in the Fiscal Responsibility and Budget Management (FRBM) Act, the government has pegged the fiscal deficit for the next financial year at 3.4% of GDP, as against the original target of 3.1%.

The rating agency said ‘while the government's growth assumptions appear reasonable, we think the government will continue to face challenges in meeting its fiscal targets, primarily due to structural increases in spending and difficulties in raising revenue further’. He further said the 3.4% fiscal deficit target for the year ending March 2020 is wider than expected, largely driven by increased spending to provide income support to small farmers and tax rebates ahead of the general elections in April-May this year. The Interim Budget for 2019-20 doled out a scheme under which farmers holding up to 2 hectares of land would get an annual payout of Rs 6,000 -- a move intended to benefit about 12 crore farmers, among other measures for middle-class taxpayers. However, there was a 0.1% slip in the fiscal deficit estimate for the current financial year to 3.4%.

Talking about India risks a rating downgrade following the breach in fiscal deficit target, Moody's said the country's 'Baa2' rating has a 'Stable' outlook, which indicates a balance of upside and downside risks. It said India's government debt remains stubbornly high as a percent of GDP, but it's mostly domestically funded with a relatively long dated maturity structure. India's economic growth also offers the potential to bring debt/GDP down, but only if the medium term fiscal objectives of the FRBM are realised. As per the FRBM Act, debt-to-GDP ratio was to be brought down to 40% by 2024-25 from 50.1% in 2017-18.

The CNX Nifty ended at 10909.05, up by 15.40 points or 0.14% after trading in a range of 10814.15 and 10927.90. There were 15 stocks advancing against 35 stocks declining on the index.(Provisional)

The top gainers on Nifty were Titan Co up by 3.47%, ONGC up by 3.31%, Reliance Industries up by 3.16%, Eicher Motors up by 2.42% and Bajaj Auto up by 1.70%. (Provisional)

On the flip side, Indiabulls Housing Finance down by 4.21%, Hindalco down by 3.45%, Yes Bank down by 3.42%, HPCL down by 3.27% and Power Grid down by 3.21% were the top losers.(Provisional)

European markets were trading mostly in red; France’s CAC decreased 13.05 points or 0.26% to 5,006.21 and Germany’s DAX decreased 2.46 points or 0.02% to 11,178.20, while UK’s FTSE 100 increased 18.59 points or 0.26% to 7,038.81.

Asian markets ended mostly higher on Monday as upbeat US jobs data helped investors shrug off worries over US-China trade tensions. Hong Kong shares ended up, even as data showed activity in China's services sector moderated in January. The Caixin services PMI fell to 53.6 from 53.9 in December, even though new export sales grew at the fastest pace in more than a year. Further, Japanese shares closed higher, with a weaker yen on the back of solid US jobs data and a surge in crude oil prices helping underpin investor sentiment. US non-farm payroll employment surged up by 304,000 jobs in January compared to economist estimates for an increase of about 165,000 jobs while the jobless rates unexpectedly ticked up to 4.0 percent, reflecting a rise in workers on temporary layoff as a result of the government shutdown. However, the employment growth in the previous month was downwardly revised to 222,000 jobs from the initially reported 312,000 jobs. Meanwhile, markets in mainland China and Taiwan are closed for the week for Lunar New Year celebrations. South Korean markets were closed for a holiday.