Post Session: Quick Review

Indian equity Markets traded with volatility for whole trading session and somehow managed to end in green terrain on Wednesday, on the back of buying by participants amid mostly positive trade in Asian equities. Key indices took winning streak to third straight session, recapturing their crucial 11,000 (Nifty) and 37,250 (Sensex) bastions. Markets traded on positive note since the beginning, taking support from Finance Minister Nirmala Sitharaman’s statement that the government is not underestimating the slow Gross Domestic Product (GDP) growth and has full focus on how it can rise in the next quarter. She also added that the government is trying to revive demand and consumption in the country. Some optimism also came in on report that the Export-Import Bank of India (Exim Bank) forecasted India’s merchandise exports to increase from $81.4 billion to $82 billion, with an expected growth rate of 0.6% from a year ago during the second quarter of 2019-20 (July-September). However, markets trimmed some of their earlier gains in late trade, as market-men got anxious with report that Fitch Ratings forecasted India's economic growth at 6.6% during the current year, down from 6.8% in the previous year, and said the government has only limited room to ease fiscal policy because of high debt.

On the global front, Asian markets ended mostly higher on Wednesday, while European markets were trading in green, as US-China tensions ebbed and investors awaited key central bank policy announcements, including the European Central Bank on Thursday and the US Federal Reserve next week. Back home, agriculture stocks were in focus with the Agricultural and Processed Food Products Export Development Authority’s (APEDA) report showing that the country's agriculture exports dipped 14.39 per cent to $5.45 billion (about Rs 38,700 crore) in April-July this fiscal. Energy stocks too were in focus with Union petroleum and natural gas minister Dharmendra Pradhan’s statement that energy demand in India is likely to grow by 4.2 percent per annum by 2035. He noted that this makes the country’s energy demand growing faster than that of all major economies in the world.

The BSE Sensex ended at 37259.53, up by 114.08 points or 0.31% after trading in a range of 37193.57 and 37343.46. There were 17 stocks advancing against 14 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 1.01%, while Small cap index was up by 1.38%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 4.26%, Auto up by 3.38%, Metal up by 2.56%, Basic Materials up by 1.70%, Consumer Discretionary Goods & Services up by 1.70%, while IT down by 1.33%, TECK down by 1.18%, FMCG down by 0.32%, Oil & Gas down by 0.29% and Utilities down by 0.28% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Yes Bank up by 13.55%, Tata Motors up by 10.17%, Tata Motors - DVR up by 10.14%, Tata Steel up by 4.00% and Vedanta up by 3.93%. (Provisional)

On the flip side, ONGC down by 3.09%, HCL Tech. down by 2.67%, Sun Pharma down by 1.70%, NTPC down by 1.43% and TCS down by 1.33% were the top losers. (Provisional)

Meanwhile, keeping India's rating unchanged at BBB- with a stable outlook, Fitch Ratings in its Asia-Pacific Sovereign Credit Overview has forecasted India's economic growth at 6.6% during the current year 2019-20 (FY20), down from 6.8% in the previous year. It said India's gross domestic product (GDP) growth decreased for a fifth consecutive quarter in the April-June quarter to 5%, the lowest in six years. It added that the government has only limited room to ease fiscal policy because of high debt. It also said GDP growth is likely to rebound to 7.1% next year.

It further said the rating balances a strong medium-term growth outlook and relative external resilience with sturdy foreign reserve buffers, against high public debt, financial sector fragilities and some lagging structural factors. It noted that domestic demand is faltering, with both private consumption and investment proving lackluster, while the global trade environment is also weak. As per the report, the contribution of gross fixed capital formation (1.3%) remained weak at the same level of the January-March quarter, when it dropped sharply, while the contribution of private consumption fell to 1.8% in the April-June from an average of 4.6% in the preceding four quarters. Manufacturing grew by only 0.6%.

Fitch went on to list confidence in a sustained reduction in general government debt over the medium term and higher sustained investment and growth rates without the creation of macroeconomic imbalances as positive sentiments. On the negative side, it listed a rise in the government debt burden due to absence of fiscal consolidation or higher off-budget spending as well as loose macroeconomic policy settings that cause a return of persistently high inflation and widening current account deficits that could risk external funding stress.

The CNX Nifty ended at 11024.35, up by 21.30 points or 0.19% after trading in a range of 11011.65 and 11054.80. There were 27 stocks advancing against 23 stocks declining on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 13.95%, Tata Motors up by 10.30%, Eicher Motors up by 4.99%, Maruti Suzuki up by 3.83% and Tata Steel up by 3.79%. (Provisional)

On the flip side, ONGC down by 3.17%, Wipro down by 3.09%, GAIL India down by 2.95%, HCL Technologies down by 2.62% and Zee Entertainment down by 2.33% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 58.45 points or 0.8% to 7,326.40, France’s CAC rose 18.39 points or 0.33% to 5,611.60 and Germany’s DAX was up by 91.05 points or 0.74% to 12,359.76.

Asian markets ended mostly in green on Wednesday, carrying over the momentum from the late surge in US stocks. The lull in the US-China trade conflict has prompted safe-haven assets to unwind recent gains. Hong Kong stocks edged higher after the Hong Kong Stock Exchange said it has started talks to buy the London Stock Exchange that would value the British company at $36.6 billion. Moreover, the investors await a handful of central bank meetings. Fed Chairman Jerome Powell recently repeated his pledge to do whatever it takes to keep the US economy growing. The comments were widely seen as a signal that policymakers are likely to cut rates again. At the Fed's July meeting, policymakers cut rates for the first time since 2008. Meanwhile, the European Central Bank will meet later this week. Markets are waiting to see whether the ECB will release more stimulus to boost the slowing Eurozone economy.