Benchmarks trade cautiously in early deals

Indian equity benchmarks have made a cautious start and are trading almost flat in early deals on Thursday as traders remained on sidelines ahead of manufacturing PMI data to be out later in the day. Traders remain concerned after India Ratings and Research marginally lowered country's Gross Domestic Product (GDP) growth projection for 2019-20 fiscal to 7.3% mainly due to below normal monsoon prediction and loss of momentum in industrial output. It had earlier projected India's GDP growth at 7.5%. However, market participants took some solace with the finance ministry’s statement that Goods and Services Tax (GST) collection scaled all-time high of over Rs 1.13 lakh crore in April, up from Rs 1.06 lakh crore in the previous month. Total number of summary sales return GSTR-3B filed for the month of March up to April 30 stood at 72.13 lakh. Some support also came with report that the growth of eight core sectors improved marginally to 4.7% in March 2019 against 4.5% in the same month last year.

On the global front Asian market were trading mixed as the US Federal Reserve dashed hopes of a near-term interest rate cut. In addition, weak commodity prices weighed on resources stocks. The markets in Japan and China are closed for public holidays. The US markets declined on Wednesday after the Federal Reserve left interest rates unchanged and reiterated it will stay patient despite a recent patch of soft inflation.

Back home, auto sector stocks remained buzzing, reacting to their monthly sales numbers. Cement sector stocks remained in focus with ICRA’s report stating that the domestic cement demand is likely to grow by 8% this fiscal which may push the capacity utilisation to 71%. It added that the growth in demand will be driven by a likely 18-20 million tonnes per annum (mtpa) of additional production capacity during the fiscal.

The BSE Sensex is currently trading at 39052.52, up by 20.97 points or 0.05% after trading in a range of 38882.99 and 39077.82. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.03%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Telecom up by 1.78%, Energy up by 0.52%, Realty up by 0.41%, Power up by 0.21% and Capital Goods was up by 0.19%, while Consumer Durables down by 0.56%, IT down by 0.49%, Auto down by 0.43%, Metal down by 0.31% and TECK was down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.45%, Bharti Airtel up by 1.55%, Hero MotoCorp up by 1.25%, Power Grid Corporation up by 0.89% and Sun Pharma Industries was up by 0.86%. On the flip side, Tata Motors down by 1.40%, Tata Motors - DVR down by 1.08%, Infosys down by 0.82%, ICICI Bank down by 0.80% and NTPC was down by 0.79% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has marginally lowered India’s gross domestic product (GDP) growth projection to 7.3% for fiscal year 2019-20 (FY20), from its earlier projection of 7.5%. The key reasons for the downward revision are the prediction of lower-than-normal monsoon for 2019 and continued agrarian distress, and the loss of momentum in the industrial output growth, especially manufacturing and electricity.

Besides, the slow progress on cases referred to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, was another reason cited by the rating agency for lowering the growth forecast. It said inability to bring the stuck capital back into the production process will have implications for investment recovery. Therefore, investment expenditure growth, as measured by gross fixed capital formation (GFCF), has been downwardly revised to 9.2% for 2019-20 from the earlier forecast of 10.3%.

Following the monsoon forecast, Ind-Ra estimates agricultural gross value added growth at 2.5% (earlier forecast was 3%) for FY20 compared with the 2.7% recorded for FY19. The key support to the gross value added growth in FY20 is likely to come from services, followed by industry. On the prices front, the rating agency expects wholesale and retail inflation to remain benign at 3.4% and 4% in FY20, respectively.

The CNX Nifty is currently trading at 11744.65, down by 3.50 points or 0.03% after trading in a range of 11699.55 and 11755.45. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 3.48%, Bharti Infratel up by 2.86%, Bharti Airtel up by 1.78%, Hero MotoCorp up by 1.22% and Indiabulls Housing was up by 1.09%. On the flip side, Tata Motors down by 1.98%, Hindalco down by 1.58%, ICICI Bank down by 1.21%, Zee Entertainment down by 1.13% and GAIL India was down by 1.05% were the top losers.

Asian Market were trading mixed; Hang Seng increased 188.02 points or 0.63% to 29,887.13, Taiwan Weighted strengthened 39.91 points or 0.36% to 11,007.64 and KOSPI was up by 8.80 points or 0.4% to 2,212.39. On the other side, Straits Times trembled 18.06 points or 0.53% to 3,382.14 and Jakarta Composite was down by 61.79 points or 0.96% to 6,393.56.