Markets trade flat with positive bias in early deals

Indian equity benchmarks have made positive opening, tacking supportive global cues, but pared most of the gains to trade flat in early deals. Traders turned cautious as Fitch lowered India's growth forecast to 6.6 per cent for the current fiscal from 6.8 per cent projected earlier, as manufacturing and agriculture sectors showed signs of slowing down over the past year. Some concern also came in as private report indicated that June may end up with a deficit, with monsoon remaining poor across the country so far. It added that there is a possibility of 40 per cent deficient monsoon in the month of June in 66 per cent districts across the country. However, markets managed to keep their head above water, taking some support with Niti Aayog CEO Amitabh Kant’s statement that circular economy has the potential to generate 1.4 crore jobs in next 5-7 years and create lakhs of new entrepreneurs. Traders took note of Reserve Bank of India Governor Shaktikanta Das’ statement that the central bank will not hesitate to take any required measure to maintain the financial stability of the economy.

On the global front, Asian markets are trading mostly in green at this point of time ahead of interest rate decisions by the US Federal Reserve and other central banks. US markets ended higher on Monday ahead of central bank policy meetings around the world as investors continue to bet the Federal Reserve will slash interest rates this year. Back home, on the sectoral front, gem and jewellery stocks exhibiting mixed trend with report that CRISIL believes the withdrawal of benefits under the Generalized System of Preferences (GSP) effective June 5, as announced by the US earlier, will moderately hit gem and jewellery exports from India. The gems and jewellery sector is already under pressure on account of stringent lending rules and working-capital crunch.

The BSE Sensex is currently trading at 38962.95, up by 2.16 points or 0.01% after trading in a range of 38960.25 and 39124.96. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.10%, while Small cap index was down by 0.17%.

The top gaining sectoral indices on the BSE were IT up by 0.63%, TECK up by 0.50%, Power up by 0.37%, Utilities up by 0.30%, Healthcare was up by 0.07%, while FMCG down by 0.72%, Metal down by 0.59%, Energy down by 0.56%, Consumer Durables down by 0.49%, Telecom was down by 0.45% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.29%, Power Grid up by 1.29%, Indusind Bank up by 1.08%, HCL Tech up by 1.03% and Vedanta was up by 0.91%. On the flip side, Yes Bank down by 1.59%, Tata Steel down by 1.48%, Asian Paints down by 1.33%, SBI was down by 1.11% and Hindustan Unilever down by 1.10% were the top losers.

Meanwhile, amid cooling activity in the manufacturing and agriculture sector, credit rating agency Fitch Ratings in its latest Global Economic Outlook, has slashed India's growth forecast to 6.6% for the current financial year from 6.8% projected earlier.

According to the Fitch, the Reserve Bank of India (RBI) is likely to cut interest rate by another 25 basis points later in 2019, which will push the policy repo rate down to 5.50%. It also said that monetary and regulatory easing from the RBI, along with a recovery in portfolio inflows, should support a recovery in credit to the private sector and reverse the drag from the negative credit impulse.

However, the agency retained its gross domestic product (GDP) growth forecast for the next fiscal (2020-21) at 7.1% and 7.0% for 2021-22. Meanwhile, for the last fiscal (FY19), GDP growth stood at 6.8%, a five-year low after FY14, when the economy grew at 6.4%.

The CNX Nifty is currently trading at 11673.10, up by 0.95 points or 0.01% after trading in a range of 11662.80 and 11716.55. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 1.66%, Power Grid up by 1.44%, Infosys up by 1.37%, Indusind Bank up by 1.24% and Cipla was up by 1.16%. On the flip side, JSW Steel down by 1.61%, Indiabulls Housing Finance down by 1.59%, Asian Paints down by 1.58%, Tata Steel down by 1.55% and Yes Bank was down by 1.55% were the top losers.

Asian markets are trading mostly in green; Hang Seng increased 200.10 points or 0.73% to 27,427.26, Jakarta Composite soared 47.39 points or 0.77% to 6,237.92, Straits Times advanced 25.85 points or 0.81% to 3,233.84, Taiwan Weighted strengthened 15.05 points or 0.14% to 10,545.59, KOSPI rose 7.39 points or 0.35% to 2,098.12 and Shanghai Composite gained 2.36 points or 0.08% to 2,889.98, while Nikkei 225 slipped 156.25 points or 0.74% to 20,967.75.