Markets trade flat with positive bias in early deals

Indian markets made a cautious start and are trading flat with positive bias in early deals on Wednesday, ahead of the Reserve Bank of India's (RBI) monetary policy meeting outcome later in the day. The central bank is widely expected to cut the repo rate by 25 bps for a fourth time in a row to boost economic activities. Traders took note of Former RBI Governor Bimal Jalan’s statement that the government should borrow only long-term fund from the overseas market, and the quantum should not exceed 1.5% of GDP under any circumstances. Jalan said that he does not have negative view about overseas sovereign borrowing, but he thinks India does not need to borrow from abroad. Though, some cautiousness crept in with economic think-tank NCAER’s statement that India's GDP growth is likely to be 6.2 per cent during the current fiscal, down from 6.8 per cent in 2018-19, on account of flat growth in agriculture sector. The prospects for agricultural sector in 2019-20 depend largely on the south-west monsoon. It added that the country as a whole has received 7 per cent below normal rainfall by August 5, 2019. It has also experienced temporal variations in rainfall.

On the global front, Asian markets were trading mixed amid report that China's decision to stabilize its currency suggests Beijing might hold off from aggressively allowing the yuan to weaken as a way to respond to US tariffs on Chinese goods. Back home, on the sectoral front, tyre stocks were in focus amid ratings agency Icra’s statement that demand slowdown will curtail tyre industry's revenue growth to 3-4 per cent in 2019-20, and margins are expected to decline. In scrip specific development, Aditya Birla Fashion and Retail rose on reporting around 4-fold jump in its net profit at Rs 21.56 crore for the quarter ended June 30, 2019 as compared to Rs 5.60 crore for the same quarter in the previous year. Sagar Cements surged on logging growth in production and sales in July.

The BSE Sensex is currently trading at 36990.59, up by 13.74 points or 0.04% after trading in a range of 36885.48 and 37037.60. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.36%, while Small cap index was up by 0.57%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.67%, Realty up by 0.61%, Utilities up by 0.61%, TECK up by 0.55% and IT was up by 0.51%, while Metal down by 1.28%, Consumer Durables down by 1.07%, Basic Materials down by 0.19%, PSU down by 0.15% and Bankex was down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.86%, Hero MotoCorp up by 1.77%, Indusind Bank up by 1.71%, Hindustan Unilever up by 1.21% and Power Grid up by 1.01%. On the flip side, Tata Steel down by 2.94%, Mahindra & Mahindra down by 1.39%, Axis Bank down by 0.97%, Kotak Mahindra Bank down by 0.91% and HDFC down by 0.80% were the top losers.

Meanwhile, with flat growth in agriculture sector, economic policy think-tank, the National Council of Applied Economic Research (NCAER) in its latest report said that India's Gross Domestic Product (GDP) growth is likely to be 6.2 per cent during the current fiscal (FY20), down from 6.8 per cent in 2018-19. It also said that the prospects for agricultural sector in 2019-20 depend largely on the south-west monsoon.

It said out of a total number of 36 agro-meteorological sub-divisions in the country, three have received excess rainfall, 21 get normal rainfall, while the remaining 12 sub-divisions were rain deficient, as of August 5, 2019. It added that the country as a whole has received 7 per cent below normal rainfall by August 5, 2019. The country has also experienced temporal variations in rainfall.

NCAER’s forecast as per the annual model for Gross Value Added (GVA) at basic prices is at 6 per cent for 2019-20 on a year-on-year (y-o-y) basis. The forecast as per the quarterly model is that GVA will grow at 6.2 per cent on a y-o-y basis. It further said the real agriculture GVA is envisaged to grow at zero per cent, real industry GVA at 6.1 per cent, and real services GVA at 6.9 per cent in 2019-20.

On the inflation front, it said the Wholesale Price Index (WPI) inflation is projected at 2.6 per cent. Besides, the growth rates in exports and imports, in dollar terms, are estimated at 4.4 per cent and 3.3 per cent, respectively. The current account balance and central fiscal deficit, as percentages of GDP, are projected at (-) 0.6 per cent and 3.5 per cent, respectively.

The CNX Nifty is currently trading at 10950.30, up by 2.05 points or 0.02% after trading in a range of 10913.40 and 10959.70. There were 28 stocks advancing against 20 stocks declining, while 2 stocks remain unchanged on the index.

The top gainers on Nifty were Zee Entertainment up by 5.90%, Yes Bank up by 4.16%, Wipro up by 1.74%, Hero MotoCorp up by 1.69% and Indusind Bank up by 1.64%. On the flip side, Indiabulls Housing Finance down by 7.19%, Tata Steel down by 3.14%, Titan Company down by 3.06%, JSW Steel down by 1.86% and Mahindra & Mahindra down by 1.26%.

Asian markets were trading mixed; Nikkei 225 declined 73.37 points or 0.36% to 20,511.94, Hang Seng slipped 97.10 points or 0.37% to 25,879.14, KOSPI decreased 1.79 points or 0.09% to 1,915.71 and Shanghai Composite was down by 0.20 points or 0.01% to 2,777.36. On the flip side, Taiwan Weighted strengthened 26.51 points or 0.26% to 10,421.26, Straits Times advanced 4.33 points or 0.14% to 3,174.80, Jakarta Composite was up by 93.89 points or 1.53% to 6,213.36.