Bourses eke out slender gains in volatile session

Indian equity benchmarks managed to eke out slender gains on Tuesday, with Sensex and Nifty settling above their crucial psychological levels of 36,600 and 10,900, respectively. After a cautious start, the markets traded volatile, as fiscal deficit or gap between Government's expenditure and revenue exceeded to Rs 7.01 lakh crore during April-December of the current financial year (FY19) and touched 112.4% of the full-year Budget Estimate (BE) of Rs 6.24 lakh crore on the back of lower revenue collections. Adding more anxiety among the traders, Moody's Investors Service said that fiscal slippage from the budgeted targets for the past two consecutive years and tax cuts and spending ahead of the general elections, is credit negative for India. Domestic sentiments also got hit after India’s services sector activity cooled for the second straight month in January amid the weakest upturn in new work since last September. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index slipped to 52.2 in January from 53.2 in December. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services – remained unchanged at 53.6 in January.

However, in the second half of the session, the key indices managed to keep their heads above water, aided by S&P Global Ratings’ statement that falling inflation and declining global crude oil prices have created space for the Reserve Bank of India (RBI) to cut interest rates. The RBI is scheduled to announce its sixth bi-monthly policy review for the fiscal on February 7. Separately, SBI Research report stated that the Reserve Bank may cut key lending rate by 0.25 per cent later this week in view of benign inflation. Some relief also came with the think tank vice chairman Rajiv Kumar’s statement that the Niti Aayog is open to the idea of having a role in fund allocation to states for developmental expenditure and would discuss the matter with the 15th Finance Commission. The street reacted positively to Union Commerce Secretary Anup Wadhawan’s statement that the country's exports in the current fiscal year are expected to surpass the earlier peak of $314 billion in 2013-14.  The achievement comes against the backdrop of a very challenging global environment. The exports, in general, have been growing almost consistently for the last three years. Traders were seen taking note of report that government sought Parliament's nod for gross additional expenditure of Rs 1,98,831.36 crore during the current fiscal ending March.

On the global front, European markets were trading in green, as Eurozone industrial producer prices decreased for a second straight month in January and at the fastest pace in three years. The preliminary figures from Eurostat showed that producer prices decreased 0.8 percent from November, when they fell 0.3 percent. The latest decline was the biggest since January 2016, when prices fell 1.1 percent. Besides, Italy's consumer price inflation eased in January to its lowest level in nine months. The preliminary figures from the statistical office Istat showed that the consumer price index climbed 0.9 percent year-over-year in January, slower than December's 1.1 percent increase. The inflation rate was the lowest since April, when it was 0.5 percent. Among the Asian markets, Nikkei index ended in red, as trading volumes remained thin amid Lunar New Year holidays in China, Taiwan, South Korea, Singapore and Indonesia.

Back home, telecom sector stocks ended mixed, despite report that telecom firms, barring Reliance Jio, have asked the government to waive GST on spectrum payments and other levies, while adjusting accumulated tax credits of Rs 35,000 crore in the pending payments. Stocks related to the agri sector remained in focused, as the government plans to launch an index to rank states on the basis of ease of doing agri-business. The proposed index will help in fostering agriculture among states by promoting a competitive spirit. Further, e-commerce companies stocks remained in limelight, with Care Ratings estimating that India’s e-commerce industry is expected to reach $125-150 billion by FY20 on increased internet penetration. The firm said that internet subscribers are expected to increase to 830 million by 2021 from around 560 million as of September 2018.

Finally, the BSE Sensex gained 34.07 points or 0.09% to 36,616.81, while the CNX Nifty was up by 22.10 points or 0.20% to 10,934.35.

The BSE Sensex touched a high and a low of 36,727.83 and 36,495.83, respectively and there were 17 stocks advancing against 13 stocks declining, while 1 stock remain unchanged on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.54%, while Small cap index was down by 0.91%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.18%, Auto up by 0.88%, Consumer Disc up by 0.58% and Bankex up by 0.28%, while Realty down by 2.14%, Power down by 1.03%, Capital Goods down by 1.00%, PSU down by 0.98% and Industrials down by 0.95% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.66%, Indusind Bank up by 2.56%, Bajaj Auto up by 2.46%, Maruti Suzuki up by 1.84% and Mahindra & Mahindra up by 1.40%. On the flip side, Tata Motors down by 2.63%, Tata Motors - DVR down by 2.53%, Coal India down by 2.48%, ONGC down by 2.46% and Tata Steel down by 2.32% were the top losers.

Meanwhile, foreign direct investment (FDI) in India fell by 11 percent to $22.66 billion during the first half of the financial year 2019 (H1FY19). According to commerce and industry ministry data, the foreign fund inflows stood at $ 25.35 billion during April-September 2017-18.

Data further indicated that key sectors that received maximum foreign investment up to September, 2018 include services ($ 4.91 billion), computer software and hardware ($2.54 billion), telecommunications ($2.17 billion), trading ($2.14 billion), chemicals ($1.6 billion), and automobile industry ($1.59 billion). It also showed that Singapore was the largest source of FDI during April-September 2018-19 with $8.62 billion inflow, followed by Mauritius ($3.88 billion), the Netherlands ($2.31 billion), Japan ($1.88 billion), the US ($970 million), and UK ($845 million).

FDI had increased at a five-year low growth of 3 percent at $ 44.85 billion in 2017-18. It pointed out that a decline in foreign inflows could put pressure on the country's balance of payments and may also impact the value of the rupee.

The CNX Nifty traded in a range of 10,956.70 and 10,886.70. There were 30 stocks advancing against 19 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Zee Entertainment up by 4.86%, Titan up by 4.17%, UPL up by 3.62%, Dr. Reddy’s Lab up by 2.99% and Hero MotoCorp up by 2.94%. On the flip side, Coal India down by 2.70%, Tata Steel down by 2.38%, Tata Motors down by 2.36%, YES Bank down by 2.20% and ONGC down by 2.05% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 1.12 points or 7034.13% to 78.80, France’s CAC added 0.78 points or 5009.83% to 39.17 and Germany’s DAX was up 0.88 points or 11178.75% to 98.09.

The only major Asian market trading today ‘Japanese stock exchange’ ended in red on Tuesday, after a Bank of Japan (BoJ) official said the yen could jump to 95 per US dollar in the first half of the year and the central bank is running short on ammunition. However, the downside remained limited after a survey showed the services sector in Japan expanded at a stronger pace in December. Most of the regional markets were closed for the Lunar New Year, including South Korea, Malaysia, Singapore, Taiwan, China, Hong Kong and Indonesia.