Post Session: Quick Review

Indian equity benchmarks traded in red zone throughout the day on Wednesday and sudden plunge in the final hour of trade forced the markets to close near day’s low. Key indices made a cautious start and traded flat in morning deals, amid growth concerns after the International Monetary Fund (IMF) lowered Gross Domestic Product (GDP) outlook for India as well as the global economy. The IMF has moderately scaled down India’s economic growth projection to 7.3 per cent for the current financial year from its earlier forecast of 7.4 per cent and suggested that the country should continue to undertake economic reforms, including hire and fire, to create jobs. After that, markets added some losses in early noon session as traders remain concerned with the finance ministry’s statement that the government has fallen short of Rs 50,000 crore in its direct tax collection target of Rs 12 lakh crore for 2018-19.

In late trade, markets extended their fall, as the International Monetary Fund (IMF) cut its global growth forecast to the lowest level since the financial crisis, warning of significant downside risks to the world economy including trade tensions, pockets of political instability, mounting debt levels and increasing inequality. Investors also remained cautious ahead of March-quarter earnings beginning later this week. Traders even overlooked report that the government has managed to meet the revised fiscal deficit target of 3.4 percent of the GDP after it cut last minute expenditure and rolled over fuel subsidies to make up for the shortfall in tax collection.

On the global front, Asian markets ended mixed on Wednesday, as growth worries coupled with geopolitical issues like US-China trade tensions dented investors' appetite for risk. European markets were trading in green ahead of a Brexit summit and a policy meeting of the European Central Bank. Back home, majority of auto stocks ended lower, as automobile dealers' body Federation of Automobile Dealers Associations (FADA) said that retail sales of passenger vehicles (PV) in March declined by 10 per cent to 2,42,708 units as compared to the same period last year. PV sales stood at 2,69,176 units in March 2018. Further, airlines stocks were in focus, after the Directorate General of Civil Aviation (DGCA) asked each of the airlines to bring individual medium-term plan on enhancing overall availability of domestic flights, in a bid to curb rising airfares.

The BSE Sensex ended at 38571.59, down by 367.63 points or 0.94% after trading in a range of 38542.28 and 38950.45. There were 9 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.33%, while Small cap index was down by 0.01%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.20%, Healthcare up by 0.55%, Industrials up by 0.32%, Auto up by 0.18% and Consumer Durables up by 0.16%, while Telecom down by 2.40%, TECK down by 1.09%, Metal down by 1.01%, Utilities down by 0.97% and Bankex down by 0.91% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 4.61%, Tata Motors - DVR up by 3.07%, Hindustan Unilever up by 0.72%, Coal India up by 0.52% and Bajaj Auto up by 0.47%. (Provisional)

On the flip side, Bharti Airtel down by 3.65%, TCS down by 2.26%, Asian Paints down by 2.19%, HDFC Bank down by 2.05% and HDFC down by 2.03% were the top losers. (Provisional)

Meanwhile, the International Monetary Fund (IMF) in its latest World Economic Outlook (WEO) has projected India’s growth rate at 7.3% in 2019 and 7.5% in 2020, supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy, thus remaining the fastest growing major economy of the world. Though, growth forecast have been revised downward compared with the October 2018 WEO by 0.1 percentage point for 2019 and 0.2 percentage point for 2020, respectively, amid the recent revision to the national account statistics that indicated somewhat softer underlying momentum.

The report stated that growth in India is expected to stabilise at just under 7% over the medium term, based on continued implementation of structural reforms and easing of infrastructure bottlenecks. It believes that in India, continued implementation of structural and financial sector reforms with efforts to reduce public debt remain essential to secure the economy's growth prospects. In the near term, continued fiscal consolidation is needed to bring down India's elevated public debt. This should be supported by strengthening goods and services tax compliance and further reducing subsidies.

IMF noted that important steps have been taken to strengthen financial sector balance sheets, including through accelerated resolution of non-performing assets under a simplified bankruptcy framework. These efforts should be reinforced by enhancing governance of public sector banks. Reforms to hiring and dismissal regulations would help incentivise job creation and absorb the country's large demographic dividend; efforts should also be enhanced on land reform to facilitate and expedite infrastructure development. Besides, in 2018, the country’s growth rate was 7.1%, as against China's 6.6%. In 2019, it has projected a growth rate of 6.3% for China and 6.1% in 2020.

The CNX Nifty is currently trading at 11583.60, down by 88.35 points or 0.76% after trading in a range of 11571.75 and 11680.05. There were 20 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 4.86%, Wipro up by 2.68%, Cipla up by 2.45%, Adani Ports &SEZ up by 0.89% and Coal India up by 0.80%. (Provisional)

On the flip side, Bharti Airtel down by 3.84%, Asian Paints down by 2.55%, TCS down by 2.53%, Hindalco down by 2.42% and HDFC Bank down by 2.16% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 5.90 points or 0.08% to 7,431.47, France’s CAC rose 21.62 points or 0.4% to 5,458.04 and Germany’s DAX was up by 47.83 points or 0.4% to 11,898.40.

Asian markets ended mixed on Wednesday, as growth worries coupled with geopolitical issues like US-China trade tensions and Brexit dented investors' appetite for risk. Global Times' editorial urged patience after US President Donald Trump said a trade deal could be reached in about four weeks. It is still uncertain when, or even whether, Beijing and Washington can reach a trade deal. Further, the International Monetary Fund slashed its global economic growth forecast once again on Tuesday, and said it expects the world economy to grow by 3.3 percent this year. That’s down from its previous outlook of 3.5 percent, which was also a downgrade. The IMF added that it expects the economy to expand by 3.6 percent in 2020. Japanese shares ended lower as investors kept an eye on escalating trade tensions between the United States and Europe and an upcoming press conference by European Central Bank President Mario Draghi.