Local equities trim gains to trade flat

Local equity benchmarks have trimmed their early gains to trade flat in the morning session, ahead of the Q1 GDP data number announcement. Traders turned cautious as Reserve Bank of India’s annual report showed that subdued global demand and some slack in government consumption expenditure led to a moderation in economic activity during 2018-19. Even as accommodative monetary policies around the world led to an improvement, global growth ebbed in early 2019 and near-term risks to growth remain tilted to the downside. However, downside remained capped as some optimism came in with a private report that the microfinance industry witnessed a 42.9% growth in first quarter of 2019-20 over the corresponding period last year with the total loan portfolio at Rs 1,90,684 crore as on June 30, 2019. Traders took support with a report that Asian Development Bank has committed $12 billion to the government’s new flagship initiatives like piped water for all and road safety over the next three years. Markets participants took note of Reserve Bank of India’s annual report which showed that the Reserve Bank of India’s income in the year ended June 30 grew 146.59% year-on-year, allowing for a record transfer of Rs 1.76 lakh crore to the government for FY19. Besides, Union Home Minister Amit Shah stated that India’s macroeconomic fundamentals are quite strong and its economy is currently growing at the fastest pace in the world.

On the global front, Asian markets were trading in green, on hopes US-Chinese talks next month might produce progress toward ending a costly tariff war over trade and technology. Back home, CRISIL Research report stated that monsoon deficit in the crucial first one-and-half months of the Kharif-sowing season, coupled with excessive rains in August that inundated agricultural fields in several states, are likely to drag down production of foodgrain this season by 3-5% from last year’s 141.71 million tonne.

The BSE Sensex is currently trading at 37075.34, up by 6.41 points or 0.02% after trading in a range of 37011.98 and 37318.99. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.34%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were Metal up by 1.85%, Realty up by 0.88%, Basic Materials up by 0.58%, FMCG up by 0.51% and Consumer Durables was up by 0.43%, while Energy down by 0.48%, Telecom down by 0.40%, Oil & Gas down by 0.39%, IT down by 0.38% and TECK was down by 0.35% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.43%, Tata Steel up by 2.25%, Sun Pharma up by 0.91%, ITC up by 0.87% and HDFC Bank was up by 0.65%. On the flip side, Yes Bank down by 2.27%, Tech Mahindra down by 1.97%, HCL Tech. down by 1.85%, NTPC down by 0.93% and Mahindra & Mahindra was down by 0.91% were the top losers.

Meanwhile, credit rating agency ICRA has said passenger vehicle (PV) sales in India may decline in the range of 4-7% in current financial year (FY20). It asserted that agricultural output, revival in economic and industrial growth would be critical for auto sector's growth despite recent government measures to rekindle demand. The auto industry has already registered a 21.6% plus de-growth in the first four months of FY20. The auto industry has been grappling with a tough time since the beginning of the second quarter of FY19 and growth has slowed down.

The agency highlighted that weak consumer sentiment across urban and rural markets on account of weak farm inflows, subdued agri-commodity prices, rising cost of ownership as a result of regulatory changes including safety, emissions, vehicle registration, along with a rise in interest cost/EMI, have impacted demand. Moreover, tight liquidity situation among financiers, banks and especially NBFC segment; revision in axle load norms, a slowdown in government spending on infrastructure and; uncertainty related to selection between BS-IV versus BS-VI among buyers, have also played roles in the slowdown.

Besides, on the two-wheelers front, it said growth will be contingent upon the introduction of BS VI across all models from April 1, 2020, which will lead to price increases across the industry. Therefore, the quantum of price hikes will be determined by the prevailing market sentiments and overall market dynamics.

The CNX Nifty is currently trading at 10945.15, down by 3.15 points or 0.03% after trading in a range of 10931.35 and 11024.85. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.39%, Vedanta up by 2.28%, GAIL India up by 2.18%, Tata Steel up by 2.10% and Zee Entertainment was up by 1.51%. On the flip side, Yes Bank down by 2.44%, Bharti Infratel down by 2.17%, Indiabulls Housing down by 2.07%, HCL Tech down by 2.05% and Tech Mahindra was down by 2.03% were the top losers.

Asian markets were trading in green, Nikkei 225 surged 237.17 points or 1.16% to 20,698.10, Hang Seng increased 168.64 points or 0.66% to 25,872.14, Taiwan Weighted strengthened 121.77 points or 1.16% to 10,584.20, KOSPI rose 33.55 points or 1.74% to 1,966.96, Jakarta Composite soared 25.54 points or 0.41% to 6,314.66, Straits Times advanced 24.67 points or 0.8% to 3,106.50 and Shanghai Composite was up by 6.67 points or 0.23% to 2,897.59.