Last hour recovery helps indices to close higher

Last hour recovery helped the key Indian equity benchmarks to close Monday’s trading session in positive territory. The bourses made a negative start, impacted by 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. The markets participants were nervous, amid reports 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. Sentiments also got hit with a private report stating that public sector investments are expected to grow at a much slower pace in 2019-20, as capital outlay by public sector enterprises is expected to remain at almost the same level as 2018-19, while capital spending by the Centre is budgeted to grow at a much slower pace next year.

The trade remained lackluster for the most part of the session, as Fitch Solutions, the research arm of Fitch Group, also projected the government's fiscal deficit to overshoot the budgeted target by 0.2 percent to 3.6 percent of GDP in 2019-20 fiscal. It said that 2019-20 Budget appears to show a strong populist bent in the run up to the General election due by May 2019. Adding anxiety among the investors, the commerce and industry ministry data showed that foreign direct investment (FDI) into India has declined 11 percent to $ 22.66 billion during April-September period of the current fiscal. The foreign fund inflows during April-September 2017-18 stood at $ 25.35 billion. However, in the last leg of the trade, the key indices recovered from losses to end higher, supported by Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta’s statement that the new online National Logistics Portal (NLP) and forthcoming national policy would help boost India’s export growth. He also said that the sector assumes significance as reduction in logistics cost and time would help promote competitiveness of domestic products in global markets.

On the global front, European markets were trading in red, as UK manufacturing growth slowed more-than-expected in January to its lowest level in three months. The survey data from IHS Markit showed that the IHS Markit/CIPS Purchasing Managers' Index for manufacturing fell to 52.8 from 54.2 in December. Separately, Sweden's manufacturing growth slowed for a second straight month in January to its lowest level in nearly three years amid a decline in new orders and backlogs. The survey data from Swedbank and the logistics association Silf showed that the manufacturing Purchasing Managers' Index dropped to 51.5 from 51.8 in December. The latest reading was the lowest since February 2016. Asian markets ended in green, as investors await further developments on the US-China trade dispute following meetings in Washington last week. US President Donald Trump and Chinese President Xi Jinping are expected to meet on February 27 and 28 in the coastal city of Da Nang to address issues that are more contentious.

Back home, stocks related to the sugar industry ended lower, after Indian Sugar Mills Association (ISMA) latest report said that sugar production is estimated to decline to 307 lakh tonnes in 2018-19 marketing year (October-September) from record 325 lakh tonnes in the previous year. Infrastructure stocks also declined, amid reports that as many as 363 infrastructure projects, each worth Rs 150 crore or more, have shown cost overruns to the tune of over Rs 3.42 lakh crore owing to delays and other reasons. Further, shares related to construction equipment sector came under pressure, after Indian Construction Equipment Manufactures' Association (ICEMA) President Arvind Garg said that growth of the construction equipment sector declined to 10 percent, after liquidity crisis gripped NBFCs following the IL&FS default. He further added that the sector was growing at around 20 percent prior to the IL&FS crisis.

Finally, the BSE Sensex gained 113.31 points or 0.31% to 36,582.74, while the CNX Nifty was up by 18.60 points or 0.17% to 10,912.25.

The BSE Sensex touched a high and a low of 36,622.77 and 36,225.48, respectively and there were 12 stocks advancing against 19 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.82%, while Small cap index was down by 1.17%.

The top gaining sectoral indices on the BSE were Energy up by 2.24%, Consumer Durables up by 0.84%, Oil & Gas up by 0.47%, Bankex up by 0.20% and IT up by 0.12%, while Utilities down by 2.29%, Power down by 2.13%, Telecom down by 1.79%, Healthcare down by 1.29% and Industrials down by 1.18% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 3.52%, ONGC up by 3.03%, Bajaj Auto up by 1.67%, Kotak Mahindra Bank up by 1.17% and HDFC up by 0.87%. On the flip side, Power Grid down by 3.13%, Yes Bank down by 3.10%, Sun Pharma down by 2.10%, NTPC down by 2.07% and Mahindra & Mahindra down by 2.01% were the top losers.

Meanwhile, Economic Affairs Secretary Subhash Chandra Garg has said 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. He also said that in the interim budget 2019-20, the government announced transfer of Rs 6,000 per year to 12 crore farmers holding cultivable land up to 2 hectare directly into their bank accounts from this year itself. Besides, the government has already earmarked Rs 20,000 crore for disbursal among 12 crore farmers under the scheme in 2018-19.

Garg informed said that the government last year released Agriculture Census 2015-16 and most states have moved to electronic record-keeping. He also said that the work which the agriculture department now would be doing is to relate these holdings to the families which will receive the assistance. He said “they are very confident that they will do with the state governments very soon and they expect to make disbursements of substantial amount in the month of February itself. That is the expectation and confidence of the (agri) department.”

Economic Affairs Secretary further said that supplementaries would be presented in the current session to seek Parliament’s nod for spending additional Rs 20,000 crore for the scheme. He also said that the ongoing budget session is scheduled to conclude on February 13. Besides, he stated that the PM-KISAN scheme has been approved by the Cabinet and therefore the necessary approval for the administrative department to implement the scheme is also available. Emphasizing that agriculture department has already done the spadework, he said the 12 crore beneficiary number has been arrived at with the help of Agriculture Census Data 2015-16.

The CNX Nifty traded in a range of 10,927.90 and 10,814.15. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Titan up by 3.32%, ONGC up by 3.28%, Reliance Industries up by 3.16%, Eicher Motors up by 2.53% and Bajaj Auto up by 1.70%. On the flip side, Indiabulls Housing Finance down by 4.21%, Hindalco down by 3.45%, Yes Bank down by 3.34%, HPCL down by 3.27% and Power Grid down by 3.21% were the top losers.

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 lost 2.46 points or 0.02% to 11,178.20, while UK’s FTSE 100 was up by 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.