Firm trade persists; Sensex gains over 200 points

Key Indian benchmarks continued their firm trade in early noon session, with the Sensex gaining more than 200 points and Nifty reclaims 11,000 mark, amid positive Asian cues. Software and technology sector witnessed the maximum gain in trade followed by Energy and Oil & Gas sectors. Sentiment was upbeat as 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. The US and China are locked in a trade war since President Donald Trump imposed heavy tariffs on imported steel and aluminium items in March last year, a move that sparked fears of a global trade war. The tit-for-tat trade dispute between China and the United States may do little to protect domestic producers in either country and could have 'massive' implications on the global economy unless it is resolved. Adding some optimism as finance ministry is expecting economic growth to accelerate to 7.5% in 2019-20 from 7.2% projected for the current fiscal. Meanwhile, government expressed hope that the country's exports that are currently growing at 10% will maintain the pace this fiscal. The market participants took note of Global rating agency Moody’s Investors Service report that the 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.

On the global front, Asian stock markets were trading in green, following a rally on Wall Street led by technology companies. Back on Street, on scrip specific developments, Usha Martin gained on achieving pellet production at 93,700 MT in Q3FY19, up by 50.0% compared to Q3FY18. Birla Corporation edged up on reporting consolidated net profit of Rs 27.35 crore for the quarter under review against net loss of Rs 21.84 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 36839.46, up by 222.65 points or 0.61% after trading in a range of 36680.88 and 36894.25. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.37%, while Small cap index was down by 0.46%.

The top gaining sectoral indices on the BSE were TECK up by 1.14%, IT up by 1.13%, Energy up by 0.94%, Oil & Gas up by 0.83% and Metal was up by 0.76%, while Telecom down by 0.50%, Consumer Durables down by 0.50%, Realty down by 0.46%, Industrials down by 0.39% and Healthcare was down by 0.29% were the losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.43%, Bajaj Finance up by 2.03%, Tata Steel up by 1.98%, ONGC up by 1.40% and Bajaj Auto was up by 1.38%. On the flip side, Indusind Bank down by 1.44%, Bharti Airtel down by 1.17%, NTPC down by 0.80%, Tata Motors - DVR down by 0.61% and Tata Motors was down by 0.48% 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 is currently trading at 11004.10, up by 69.75 points or 0.64% after trading in a range of 10962.70 and 11018.60. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 6.32%, Tech Mahindra up by 6.17%, HPCL up by 2.29%, ICICI Bank up by 2.20% and Grasim Industries was up by 2.18%. On the flip side, Adani Ports &Special down by 1.87%, Indusind Bank down by 1.41%, Titan down by 1.27%, Bharti Airtel down by 1.14% and Dr. Reddys Laboratory was down by 0.97% were the top losers.

Several markets in Asia are closed for the Lunar New Year holiday. Jakarta Composite soared 61.67 points or 0.95% to 6,543.12 and Nikkei 225 was up by 29.61 points or 0.14% to 20,874.06.