Key indices keep head above water in early noon deals

Local equity benchmarks managed to keep their head above water in early noon deals with both Sensex and Nifty trading above 37,000 and 10,950 marks, respectively amid the outcome of Reserve Bank of India’s policy later in the day. The Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das will announce the decision of the third bi-monthly policy review of the current financial year around noon, amid expectations of yet another 25 basis points cut in lending rate to boost the slowing economy. However, upside remain capped 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. Meanwhile, a private report stated that the recent audit finding has made critical observations of the total income tax demand arrears of the government which is at a staggering Rs 11 lakh crore till the end of 2017-18 financial year. Significantly, more than Rs 10.94 lakh crore of this arrears are difficult to recover, owing to different reasons.

On the global front, Asian markets were trading mixed amid report that Chinese central bank set the midpoint for its currency’s exchange rate against the dollar. The Chinese currency fell against the US dollar in offshore trade after the currency's daily fixing. Back on street, sugar stocks were trading lower as a private report stated that India is likely to miss the target of exporting 5 million tonnes of sugar, which was expected to reduce the glut in the market, as it has shipped out only 3.4 million tonnes with barely two months left in the current season that ends on September 30. 

The BSE Sensex is currently trading at 37027.30, up by 50.45 points or 0.14% after trading in a range of 36885.48 and 37066.59. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.53%, while Small cap index was up by 0.90%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.11%, TECK up by 0.98%, IT up by 0.87%, Telecom up by 0.74% and Power was up by 0.73%, while Consumer Durables down by 1.44%, Metal down by 1.03%, Oil & Gas down by 0.94%, Energy down by 0.64% and PSU was down by 0.43% were the losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 6.56%, Hero MotoCorp up by 2.01%, Indusind Bank up by 1.90%, Hindustan Unilever up by 1.77% and Sun Pharma was up by 1.60%. On the flip side, Tata Steel down by 2.84%, ONGC down by 1.67%, Axis Bank down by 1.17%, Mahindra & Mahindra down by 1.15% and ITC was down by 0.66% were the top losers.

Meanwhile, former RBI Governor Bimal Jalan has said that the government must borrow only long-term fund from the external market, and the quantum should not exceed 1.5 percent of Gross domestic product (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.

He also stated that the panel on Reserve Bank of India's (RBI) economic capital framework will meet again to finalise its report to decide appropriate capital reserves for the central bank. He also said that while deciding the appropriate capital reserves for the RBI, the resources and the risk factors are going to be taken into account.

Former RBI Governor further said that the government will soon initiate the process of gross borrowing programme from external markets in foreign currencies in the second half of current fiscal (H2FY20), in a move that will ease pressure on local markets. He noted that India's sovereign external debt-to-GDP ratio remains among the lowest globally at less than 5 percent.

The CNX Nifty is currently trading at 10951.30, up by 3.05 points or 0.03% after trading in a range of 10913.40 and 10970.20. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 6.72%, Yes Bank up by 6.44%, Cipla up by 2.47%, Hindustan Unilever up by 1.81% and Indusind Bank was up by 1.80%. On the flip side, Indiabulls Housing down by 8.23%, Titan Company down by 4.18%, Tata Steel down by 3.01%, BPCL down by 2.33% and Indian Oil Corporation was down by 1.62% were the top losers.

Asian markets were trading mixed; Hang Seng decreased 9.52 points or 0.04% to 25,966.72, Nikkei 225 slipped 60.55 points or 0.29% to 20,524.76, KOSPI fell 3.61 points or 0.19% to 1,913.89, Taiwan Weighted was down by 8.57 points or 0.08% to 10,386.18.

On the other hand, Straits Times advanced 11.76 points or 0.37% to 3,182.23, Jakarta Composite soared 86.95 points or 1.42% to 6,206.42 and Shanghai Composite was up by 7.94 points or 0.29% to 2,785.50.