Markets end Wednesday’s trading session near day’s high

Indian equity benchmarks ended Wednesday’s trading session near their intraday high points. The start of day was positive, with the finance ministry expecting economic growth to accelerate to 7.5% in 2019-20 from 7.2% projected for the current fiscal. Domestic sentiments also got cheer, after the UN Conference on Trade and Development (UNCTAD) latest report said that India is among the several countries that stand to benefit from the ongoing trade tensions between the world's top two economies - the US and China. As per the report, US and China's tariffs will divert trade to other countries, with this India is likely to see rise of 3.5% in exports, while the European Union will be the biggest winner. Adding some optimism among traders, the Minister of Petroleum and Natural Gas & Skill Development and Entrepreneurship Dharmendra Pradhan said that India has emerged as a bright spot in the global economy in the recent years. He also added that with strong economy and supportive policy environment, the Government remains committed to inclusive, holistic and sustainable high economic growth.

Rally continued on the street in the second half of the session, amid report that Commerce Ministry met Export Promotion Councils to discuss various issues being faced by exporters and examine ways by which India’s merchandise exports may reach $ 325 billion by March 2019. Positivity remained among the investors with a report stating that the income tax e-returns filed for the April-January period has grown by over 37 percent compared with the corresponding period in FY18. While over 6.3 crore taxpayers filed returns in the first ten months of the fiscal, the government is expecting 7.6 crore returns to be filed by the end of FY19 compared with 6.9 crore in FY18. Traders overlooked the International Monetary Fund’s (IMF) statement that greater efforts will be needed to reduce the fiscal deficit as the interim budget envisages a slower pace of fiscal consolidation than previously planned. The market participants also paid no heed towards a private report stating that the Indian rupee is set to underperform against the dollar again this year, weighed down by uncertainty ahead of a national election in May, but is unlikely to retest life-time lows.

On the global front, European markets were trading red, as the IHS Markit data showed growth in Eurozone almost stalled in January. The IHI's composite final PMI dipped to 51.0 in the month from December's 51.1, its lowest reading since July 2013. A measure of Euro zone retail sales also fell as expected in December amid declines in non-food sales and online purchases. Besides, UK service sector growth also slowed more-than-expected in January, moving closer to stagnation, as new orders decreased for the first time in two-an-a-half years. Asian markets ended in green, after Trump announced he would meet North Korean leader Kim Jong Un in Vietnam at the end of February as part of a bold new diplomacy that has already yielded tangible results. Trading activity were thin across the region as markets in China, Hong Kong, Korea, Malaysia, Singapore and Taiwan remain closed on account of holiday.

Back home, sugar stocks remained in sweet spot, after Food Minister Ram Vilas Paswan highlighted that the government has taken many long-term measures such as fixing minimum selling price to help sugar millers and allowing production of ethanol from B-heavy molasses and cane juices. Besides, banking sector stocks ended higher despite India Ratings’ report that around Rs 3.5 lakh crore or 3.9% of the stressed corporate loans continue to remain unrecognised on the books of banks and nearly 40% of them may become dud assets by September 2020.

Finally, the BSE Sensex gained 358.42 points or 0.98% to 36,975.23, while the CNX Nifty was up by 128.10 points or 1.17% to 11,062.45.

The BSE Sensex touched a high and a low of 37,005.25 and 36,680.88, respectively and there were 28 stocks advancing against 03 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.12%, while Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were Metal up by 2.44%, TECK up by 1.71%, IT up by 1.64%, Oil & Gas up by 1.59% and Energy up by 1.54%, while Consumer Durables down by 0.39%, Power down by 0.22% and Utilities down by 0.12% were the only losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 4.34%, Tata Steel up by 4.23%, ONGC up by 2.73%, Bajaj Auto up by 2.60% and Tata Motors - DVR up by 1.93%. On the flip side, NTPC down by 0.98%, Axis Bank down by 0.54% and Indusind Bank down by 0.08% were the top losers.

Meanwhile, global rating agency Moody’s Investors Service in its latest report has observed that Fiscal slippage from the budgeted fiscal deficit targets over the past two years, coupled with tax cuts and spending ahead of the general elections, is credit negative for India. It also felt that the government will face challenges of meeting its target again next year and this does not bode well for medium-term fiscal consolidation.

 According to report, that means it’s a factor that can impact the country’s credit rating, but there is no change in the outlook as of now. It also expects the direct cash transfer programme for farmers and tax relief steps for the middle-class will give a fiscal stimulus of about 0.45 percent of gross domestic product (GDP) and support growth through increased consumption over the near term, though at a fiscal cost. Emphasizing India’s high debt burden as its biggest credit challenge that is unlikely to diminish rapidly, it said it is a product of persistent fiscal deficits.

The ratings agency further said “over the near term, we do not expect material improvements in the country’s public finances, which will remain sensitive to changes in nominal GDP growth.” Moreover, it will become increasingly more challenging for the government to reduce India’s central government debt-to-GDP ratio to 40% by fiscal 2024 from 48.9% in fiscal 2018, consistent with the Fiscal Responsibility and Budget Management (FRBM) targets. It added that the FRBM roadmap targets fiscal deficit of 3% of GDP by fiscal 2020.

The CNX Nifty traded in a range of 11,072.60 and 10,962.70. There were 45 stocks advancing against 05 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 8.12%, Cipla up by 7.30%, Zee Entertainment up by 6.46%, Bajaj Finance up by 4.39% and Tata Steel up by 4.34%. On the flip side, Adani Ports & SEZ down by 3.13%, Indusind Bank down by 1.23%, Dr. Reddy’s Lab down by 1.04%, Titan down by 0.69% and Axis Bank down by 0.47% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 24.32 points or 0.34% to 7,153.05, France’s CAC fell 15.70 points or 0.31% to 5,067.64 and Germany’s DAX was down by 55.64 points or 0.49% to 11,312.34.

Asian markets ended higher on Wednesday after US President Donald Trump said that he would hold a two-day summit with North Korea leader Kim Jong Un in Vietnam at the end of February as part of a bold new diplomacy. However, Trump's second State of the Union address lacked details on progress in US-China trade talks. Ahead of a fresh round of negotiations in Beijing next week, Trump said a new trade deal must include real structural change to end unfair trade practices, reduce chronic trade deficit and protect American jobs. Japanese shares ended a tad higher as investors remained focused on Trump's State of Union speech and corporate earnings. Meanwhile, several markets in the region remained closed for the Lunar New Year holidays, including South Korea, Malaysia, Singapore, Taiwan, China and Hong Kong.