Local equities turn flat; Sensex above 37,100 mark

Local equity benchmarks were trading flat on Friday amid uptick in industrial output data. Some support came in with commerce and industry minister Piyush Goyal’s statement that government would soon announce guidelines for extending foreign exchange credit to exporters. Such foreign exchange loans will be made available to exporters at very competitive rates, likely to be lower than even 4%. Some comfort also came in with report that the Reserve Bank has turned a net seller of dollars for first time this fiscal in July, having sold $93 million in the month on a net basis in the spot market. Market participants took some solace with a report that industrial production grew at 4.3% in July from just 1.2% in the previous month. While retail inflation inched up by just 6 basis points sequentially to hit 3.21% in August, offering some comfort to policy-makers, as they struggle to spur faltering economic growth by reversing a collapse in private demand.

On the global front, Asian markets were trading in green, on continued hopes for a break in the US-China trade war. Investors are staying positive ahead of the highly anticipated trade negotiations between the United States and China in the coming weeks. Back home, demand for power fell 1.6% in August, accentuating concerns over the economic slowdown. While power demand was erratic and mostly listless in FY19, the situation improved in the first quarter of the current fiscal because of general elections. On the sectoral front, leather industry stocks were in focus as a report stated that the government may provide incentives to the leather sector with a view to boost exports from this labour intensive segment. As part of a proposal which is under consideration, the government is likely to increase entitlement rate for leather garment sector for duty-free import of raw material from 3 per cent to 5 per cent.

The BSE Sensex is currently trading at 37139.89, up by 35.61 points or 0.10% after trading in a range of 37000.09 and 37244.34. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.54%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Realty up by 1.48%, Consumer Durables up by 1.28%, Consumer Disc up by 0.32%, IT up by 0.26% and FMCG was up by 0.24%, while Metal down by 0.82%, Healthcare down by 0.80%, Telecom down by 0.71%, PSU down by 0.65% and Capital Goods was down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 0.99%, Mahindra & Mahindra up by 0.95%, HCL Tech. up by 0.86%, ICICI Bank up by 0.84% and Power Grid was up by 0.68%. On the flip side, Yes Bank down by 5.08%, Tata Motors - DVR down by 1.71%, Tata Motors down by 1.68%, Tata Steel down by 1.36% and SBI was down by 0.96% were the top losers.

Meanwhile, International Monetary Fund (IMF) has said that India's economic growth is much weaker than expected mainly on account of corporate and environmental regulatory uncertainty and lingering weakness in some non-bank financial companies. It added the risks to the outlook are tilted to the downside.

IMF has cut its projection for India's economic growth by 0.3 percentage points to 7 per cent for the current financial year (FY20) owing to the weaker-than-expected outlook for the domestic demand. The growth is expected to rise to 7.2 per cent points in FY21, down by the projected growth rate of 7.5 in the earlier report.

The economic growth slowed to a seven-year low to 5 per cent in first quarter of current financial year (Q1FY20) from 8 per cent a year ago. The slowdown was largely due to a sharp dip in the manufacturing sector and agriculture output. The previous low was recorded at 4.9 per cent in April to June 2012-13. Consumer demand and private investment have weakened amid global trade frictions and dampening business sentiment.

The CNX Nifty is currently trading at 10972.85, down by 9.95 points or 0.09% after trading in a range of 10945.75 and 11023.85. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Titan Co up by 2.68%, Kotak Mahindra Bank up by 0.91%, Zee Entertainment up by 0.81%, HCL Tech up by 0.73% and ICICI Bank was up by 0.71%. On the flip side, Yes Bank down by 5.00%, Indiabulls Housing Finance down by 2.41%, Dr. Reddy’s Lab down by 2.28%, BPCL down by 1.46% and Tata Steel was down by 1.45% were the top losers.

All Asian markets were trading in green, Nikkei 225 surged 217.92 points or 1% to 21,977.53, Hang Seng increased 114.57 points or 0.42% to 27,202.20, Straits Times advanced 10.99 points or 0.34% to 3,205.95 and Jakarta Composite was up by 1.46 points or 0.02% to 6,343.63.