Local equities maintain upward trend; Sensex above 38,900 mark

Local equity markets maintained their upward momentum in the morning session, following gains in PSU, Capital Goods and Realty stocks, after exit poll results predicted that the BJP would win the Lok Sabha elections 2019 with a thumping majority. Trader were also encouraged with RBI’s report that the country’s foreign exchange reserves rose by $1.368 billion to reach $420.055 billion in the week to May 10 on account of a rise in foreign currency assets. In the previous week, the reserves had increased by $171.9 million to $418.687 billion. However, traders ignored a report that India has registered trade deficit in FY19 with as many as 11 RCEP member countries - including China, South Korea and Australia - out of the grouping of 16 nations that are negotiating a mega trade pact since November 2012. India’s trade deficit - the difference between imports and exports - with three countries (Brunei, Japan, and Malaysia) has in fact increased marginally in 2018-19 as compared to the previous fiscal. Besides, India Meteorological Department (IMD) data showed that pre-monsoon rainfall from March to May, a phenomenon vital to agriculture in several parts of the country, has recorded a deficiency of 22%. The IMD recorded 75.9 millimetres of rainfall from March 1 to May 15 as against the normal rainfall of 96.8 millimetres, which comes to around minus 22%.

On the global front, Asian markets were trading mostly in green amid a series of geopolitical developments across the region. Investors awaited the next chapter in the Sino-American trade dispute. Australian and Indian assets outperformed following elections in the two countries. Back home, industry body Indian Ports Association (IPA) showed that the 12 major ports in India recorded a growth of 5.65% and together handled 60.07 million tonnes (MT) of cargo during the period April 2019 as against 56.86 MT handled during the corresponding period of previous year.

The BSE Sensex is currently trading at 38905.83, up by 975.06 points or 2.57% after trading in a range of 38570.04 and 38909.79. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 3.12%, while Small cap index was up by 2.87%.

The top gaining sectoral indices on the BSE were PSU up by 4.61%, Capital Goods up by 4.31%, Realty up by 4.26%, Metal up by 4.21% and Industrials was up by 4.07%, while IT down by 0.35% and TECK was down by 0.07% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 6.83%, Mahindra & Mahindra up by 6.17%, ICICI Bank up by 5.98%, Tata Motors up by 5.26% and IndusInd Bank was up by 5.14%. On the flip side, Infosys down by 0.94% and Bajaj Auto was down by 0.75% were the only losers.

Meanwhile, in order to shove India’s economic growth, 15th Finance Commission Chairman N K Singh has said the new government should take on the challenge of introducing reforms in areas including land and labour. He said labour laws remain extremely complicated and there is need to bring reform by revisiting some of the issues like long-term contracts and dispute resolution. Also, there is a need to visit the area of cost, procedure and processes of land acquisition, adding that the cost of capital remain high which needs to come down so that business become globally competitive.

Besides, Singh stated fiscal rectitude is important for sustaining long-term economic growth and is the core of long-term macroeconomic stability. Moreover, he added macroeconomic stability is one of the things that will guide India’s high growth trajectory.

With regard to high debt-to-GDP ratio, he said, this ratio is misaligned with other peer group countries. The effort of the government is to bring this down, and both the Centre and state governments are well on track to bring the debt-GDP ratio to prescribed level. He also said the Fiscal Responsibility and Budget Management (FRBM) Committee 2017 has suggested bringing down the debt-to-GDP ratio to 60 per cent by 2024-25.

The CNX Nifty is currently trading at 11687.00, up by 279.85 points or 2.45% after trading in a range of 11591.70 and 11699.95. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 7.38%, Mahindra & Mahindra up by 6.83%, SBI up by 6.50%, Grasim Industries up by 6.16% and Ultratech Cement was up by 5.89%. On the flip side, Dr. Reddy’s Lab down by 5.26%, Zee Entertainment down by 2.49%, Tech Mahindra down by 2.07%, Infosys down by 0.84% and Bajaj Auto was down by 0.71% were the top losers.

Asian markets were trading mostly in green; KOSPI rose 5.65 points or 0.27% to 2,061.45, Taiwan Weighted strengthened 24.46 points or 0.24% to 10,408.57, Jakarta Composite soared 39.55 points or 0.68% to 5,866.42 and Nikkei 225 was up by 91.69 points or 0.43% to 21,341.78.

On the other side, Hang Seng decreased 109.29 points or 0.39% to 27,837.17 and Shanghai Composite was down by 17.05 points or 0.59% to 2,865.25.