Markets manage to keep heads above water on Wednesday

In a highly volatile session, Indian equity benchmarks managed to keep their heads above water in Wednesday’s trading session, with Sensex and Nifty closing higher by over 0.20% each. Key indices made a fabulous start of the day, amid reports that the finance ministry is working on one more booster dose to give a leg-up to the economy that has hit over six-year low of 5 per cent. However, soon volatility persisted over the markets, after global credit rating agency Moody's in its latest report said that reduction in the risk weight on consumer credit by the Reserve Bank of India is credit negative as it may lead to increased exposure by lenders to this loan segment.

But, equity benchmarks managed to trade in green territory for the most part of the trading session to end higher, taking comfort with Principal Economic Adviser Sanjeev Sanyal’s statement that there is far more space on the monetary side than the fiscal front for lifting sagging economic growth. Some support also came with Minister of Commerce and Industry and Railways Piyush Goyal’s statement that government is planning to launch a National Logistics Policy to reduce trade costs. He added that all transport sectors of railways, civil aviation, roads and shipping would work towards bringing logistics costs below 10%.

On the global front, European markets were trading in green, as Germany's economic sentiment improved strongly and at a faster-than-expected pace in September, after a slump in August, but the economic outlook remains negative. The ZEW Indicator of Economic Sentiment for Germany climbed to -22.5 from -44.1 in August. However, Asian market ended mixed, after Japan posted a merchandise trade deficit of 136.329 billion yen in August. Exports were down 8.2 percent on year to 6.140 trillion yen, also topping expectations for a decline of 10.9 percent following the 1.5 percent annual drop in the previous month.

Back home, healthcare industry stocks ended higher, after the Minister of Chemicals & Fertilizers Sadananda Gowda said that the sector is expected to record a threefold rise, at a CAGR of 22 per cent during 2016-2022 to reach $372 billion in 2022 from $110 billion in 2016. Further, stocks related to coal sector stocks remained in limelight, as the Centre is in the process of formulating a National Coal Index, in the wake of the government's decision to allow foreign direct investment and open up coal sector to commercial mining. IT stocks also remained in focus with ICRA’s statement that growth of IT services companies is expected to remain in 6-8 per cent range in US dollar terms in 2019-20.

Finally, the BSE Sensex gained 82.79 points or 0.23% to 36,563.88, while the CNX Nifty was up by 23.05 points or 0.21% to 10,840.65.

The BSE Sensex touched a high and a low of 36,712.99 and 36,465.92, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.39%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Realty up by 1.54%, Metal up by 1.34%, Oil & Gas up by 1.10%, PSU up by 1.09% and Utilities up by 0.89%, while Telecom down by 0.43% and Auto down by 0.10% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.95%, Vedanta up by 2.68%, SBI up by 2.41%, Tech Mahindra up by 1.71% and Bajaj Finance up by 1.47%. On the flip side, ONGC down by 2.08%, Yes Bank down by 1.61%, Bharti Airtel down by 1.21%, HDFC Bank down by 0.98% and Sun Pharma down by 0.92% were the top losers.

Meanwhile, Niti Aayog chief executive Amitabh Kant has said that there is need to take structural reforms in agriculture and exports to bring growth rate back to higher levels of 9-10 percent for a long period. He also said the fundamentals of the economy are intact which will help the government take back the economy to the higher growth trajectory soon despite the global slowdown.

Acknowledging that the structural reforms such as Goods and Services Tax (GST), and the Insolvency and Bankruptcy Code (IBC) etc had some impact in growth, Kant said in the long-run these reforms will take the country to higher growth path. He also “the government is alive, receptive and despite the global headwinds, we are very conscious that we have to take the country back to very high trajectory growth rate as our fundamentals are totally intact and we have a very vibrant private sector and have a government which is committed to reforms.”

Talking on divestment, Niti Aayog chief executive said soon the government will do a lot of asset monetization. He also said “we will put on block roads, airports, power transmission lines, and shipping terminals for privatisation and that is when credit flow will start.” He noted that it is not possible to grow for a long time without structural reforms in the agriculture sector where close to 58 percent of the country's lives. He added “you cannot keep growing on subsidies or just by giving assistance to farmers without ensuring better markets, technology or contract farming.”

The CNX Nifty traded in a range of 10,885.15 and 10,804.85. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.70%, BPCL up by 3.59%, Vedanta up by 3.16%, GAIL up by 2.77% and SBI up by 2.35%. On the flip side, Britannia down by 2.88%, Indiabulls Housing Finance down by 2.78%, Coal India down by 2.61%, ONGC down by 1.97% and Eicher Motors down by 1.49% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 11.94 points or 0.16% to 7,332.34, France’s CAC increased 6.87 points or 0.12% to 5,622.38 and Germany’s DAX increased 10.71 points or 0.09% to 12,383.32.

Asian markets ended mixed on Wednesday as investors awaited the US Federal Reserve's latest decision on monetary policy later in the day at which officials are expected to cut interest rates again. Meanwhile, Chinese shares ended up as investors looked for progress in Sino-US trade talks scheduled to start in Washington on Thursday. Seoul shares ended higher by easing crude oil prices after Saudi Arabia said more than half of the country's daily crude oil production that was knocked out by an attack had been recovered and that production capacity at its targeted plants would be fully restored by the end of the month.