Markets trade firm in early deals on Wednesday

Indian equity benchmarks made positive start and are trading firm with gains of around one third of a percent each in early deals on Wednesday. Gains in financial, metal, basic materials and auto stocks supported the markets, however losses in IT stocks kept the upside in check. Some support came in with 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. Adding optimism among market participants the Export-Import Bank of India (Exim Bank) forecasted that 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). Though, gains remained capped as 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.

Global cues also remained supportive, with Asian markets were trading mostly 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. Traders are also awaiting the latest developments in trade talks between China and the US ahead of next month’s planned top-level meeting, with both sides sounding less terse in recent statements, which has lifted hopes.

Back home, in scrip specific development, Yes Bank is in focus amid report that its CEO and managing director said the private sector lender is close to securing a deal to sell a minority stake to a global technology company. Ravneet Gill said the stake sale will help Yes Bank boost its capital. Sun Pharmaceutical Industries rose as its wholly owned subsidiary increased its shareholding in PJSC Biosintez, Russia, by way of purchase of 8698 shares (2391 ordinary shares and 6307 preferred shares) equivalent to 3.04% of PJSC Biosintez under Mandatory Tender Offer.

The BSE Sensex is currently trading at 37262.62, up by 117.17 points or 0.32% after trading in a range of 37193.57 and 37273.15. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.63%, while Small cap index was up by 0.54%.

The top gaining sectoral indices on the BSE were Metal up by 1.78%, Basic Materials up by 1.13%, Auto up by 1.10%, Healthcare up by 0.71% and Consumer discretionary was up by 0.61%, while IT down by 0.33%, TECK down by 0.25% and FMCG was down by 0.06% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 6.81%, Tata Motors up by 3.61%, Tata Motors - DVR up by 2.78%, Tata Steel up by 2.40% and Vedanta up by 2.27%. On the flip side, Infosys down by 0.74%, Kotak Mahindra Bank down by 0.51%, Tech Mahindra down by 0.28%, ITC down by 0.24% and HCL Technologies down by 0.24% were the top losers.

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 is currently trading at 11038.30, up by 35.25 points or 0.32% after trading in a range of 11011.65 and 11044.45. There were 35 stocks advancing against 14 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Yes Bank up by 5.71%, Tata Motors up by 4.88%, JSW Steel up by 3.33%, Vedanta up by 3.01% and Tata Steel up by 2.66%. On the flip side, GAIL India down by 1.25%, Tech Mahindra down by 1.25%, Wipro down by 1.17%, HCL Technologies down by 1.09% and Infosys down by 1.03% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 361.19 points or 1.35% to 27,044.87, Nikkei 225 surged 213.14 points or 1% to 21,605.24, Straits Times advanced 28.82 points or 0.91% to 3,184.53, Taiwan Weighted strengthened 22.48 points or 0.21% to 10,776.06, KOSPI rose 13.80 points or 0.68% to 2,045.88. On the flip side, Shanghai Composite declined 0.10 points to 3,021.10 and Jakarta Composite was down by 1.81 points or 0.03% to 6,334.86.