Benchmarks trade firm in early deals; Sensex above 37,500 mark

Indian equity benchmarks made positive start and are trading firm in early deals on Monday, with Sensex and Nifty garnering gains of around half a percent each. Barring Auto, all other sectoral indices were trading in green on BSE. Traders were optimistic with the Reserve Bank of India’s (RBI) data showing that India's foreign exchange reserves surged by $1.620 billion to $430.572 billion in the week to August 9 on rise in foreign currency assets. Market participants took note of report that Finance Minister Nirmala Sitharaman, under pressure to announce measures to revive the slowing economy, said on last Friday that officials of her ministry were in discussions with the Prime Minister’s Office (PMO), and the government would reveal the remedial steps once finalised. Some support also came with Fitch Solutions’ statement that the RBI is expected to cut interest rates by 40 basis points before the end of the current financial year as monetary easing till now appears to be insufficient in boosting economic growth. Investors overlooked a report that the Australia and New Zealand Banking Group (ANZ) slashed its forecast for India's economic growth to 6.2% in the financial year ending next March from a previous estimate of 6.5%, warning it would be tough for authorities to engineer a turnaround.

Global cues also remained supportive with all the Asian markets trading in green at this point of trade following a strong lead from Wall Street and comments from Donald Trump's top economic adviser hailing positive trade talks with top Chinese negotiators. Optimism that central banks will provide fresh support to head off a global economic recession has also lent much-needed support to markets. Investors will be eyeing an upcoming speech by Federal Reserve boss Jerome Powell for clues about its plans.

Back home, Ujjivan Small Finance Bank has filed a draft prospectus for Rs 1,200 crore initial public offer with market regulator Securities and Exchange Board of India (SEBI). In scrip specific development, HCL Technologies gained on signing a Memorandum of Understanding (MoU) with Maharashtra Airport Development Company (MADC) for expansion of its MIHAN campus in Nagpur, in-line with HCL’s plan for Tier-II cities in the country. Kridhan Infra traded higher with its associate company - Vijay Nirman Company (VNC) securing orders worth Rs 145 crore, for construction of Passenger Terminal Building, ATC Tower and other buildings and miscellaneous works of Goa International Airport and miscellaneous construction works at Hyderabad International Airport.

The BSE Sensex is currently trading at 37501.03, up by 150.70 points or 0.40% after trading in a range of 37479.88 and 37596.56. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.47%, while Small cap index was up by 0.51%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.29%, Telecom up by 0.91%, Capital Goods up by 0.79%, Realty up by 0.71% and Consumer Durables up by 0.63%, while Auto down by 0.10% was the only losing index on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.87%, NTPC up by 1.23%, Larsen & Toubro up by 1.05%, HCL Technologies up by 0.95% and Kotak Mahindra Bank up by 0.93%. On the flip side, Power Grid Corporation down by 1.56%, Yes Bank down by 1.01%, Tata Motors down by 0.58%, Maruti Suzuki down by 0.56% and ONGC down by 0.47% were the top losers.

Meanwhile, CARE Ratings in its latest study report has stated that growth in job creation slowed down in the financial year 2018-19 (FY19), with a 4.3% year-on-year (Y-o-Y) increase in total employment, over 6.2% Y-o-Y growth in FY18. The report showed that the number of jobs created during FY19 to be at 6.03 million. It noted that an economy growing at 6.8% should ideally be creating jobs commensurate to its growth rate. The study is based on a sample of 969 companies which has a high level of concentration as of 2019. About 12 of the 33 sectors are included, with 502 companies that accounted for 83 percent of total headcount, as of March 2019.

The study showed that growth tended to be higher in the service sectors such as finance, retail, realty, IT insurance, media and logistics. These were the relatively faster growing sectors in the economy. In the non-services sectors, non-ferrous, consumer durables and capital goods registered higher growth rates (electrical as well, though it was smaller in size). The auto sector (which saw a sharp fall in growth in production, combined with higher mechanisation), textiles (low production growth) and chemicals grew at just less than 5 percent (and have a sizeable share in total).

The slower movers were infrastructure, construction materials (even though production grew at a healthy rate), FMCG (slowdown in growth in production from 10.5% in FY18 to 4% in FY19), healthcare (slowdown in production growth from 23.1% in FY18 to 1.6% in FY19) and power (stable growth in production of around 5%). CARE Ratings said that the slower growth in the capital goods segment is a factor that has affected job growth in some sectors like infrastructure and construction material. Employment in paper industry grew by just 0.9%, which corresponded to a decline in production by 4.4% over two successive years.

The CNX Nifty is currently trading at 11096.20, up by 48.40 points or 0.44% after trading in a range of 11087.85 and 11122.65. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 3.04%, Dr. Reddy’s Lab up by 2.51%, Bharti Infratel up by 2.43%, Indiabulls Housing Finance up by 1.70% and Cipla up by 1.58%. On the flip side, Yes Bank down by 1.51%, Power Grid Corporation down by 1.47%, Tata Motors down by 0.91%, Maruti Suzuki down by 0.57% and Mahindra & Mahindra down by 0.38% were the top losers.

All the Asian markets were trading in green; Nikkei 225 gained 136.21 points or 0.67% to 20,555.02, Straits Times strengthened 17.45 points or 0.56% to 3,132.48. Hang Seng jumped 482.01 points or 1.87% to 26,216.23, Taiwan Weighted increased 90.05 points or 0.86% to 10,510.94, Kospi advanced 13.59 points or 0.71% to 1,940.76, Jakarta Composite soared 21.62 points or 0.34% to 6,308.28 and Shanghai Composite was up by 41.50 points or 1.47% to 2,865.32.