Benchmarks trade firm in early deals

Indian equity benchmarks snapped four-day losing streak with optimistic start and are trading firm in early deals on Friday amid broad base buying among IT, TECK and Bankex stocks. Investors are looking ahead to the outcome of the Reserve Bank of India's (RBI) fourth bi-monthly monetary policy review meeting later in the day. There are expectations that the RBI is likely to go for yet another rate cut, as inflation is within the comfort zone and the need to boost the economy is pressing. If the RBI announces a further rate cut of up to 25 bps, it will be the fifth in a row by the apex bank. Also, investors are eyeing Services PMI data for the month of September to be out later in the day. Traders took some encouragement with Niti Aayog CEO Amitabh Kant’s statement that there will be many more structural reforms by the government in the coming days to push economy to a high growth trajectory. He added that the government announced a series of economic boosters including capitalisation of public sector banks, merging some of them, package for exports, and bringing down corporate tax rate. Some support also came with report that Commerce and Industry Minister Piyush Goyal and US Secretary for Commerce Wilbur Ross held discussions to increase bilateral trade between the countries.

On the global front, most of the Asian markets were trading lower despite the overnight gains on Wall Street after two days of significant losses amid optimism that the US Federal Reserve will cut interest rates later in October. Investors turned cautious ahead of the release of the US Labor Department's closely-watched monthly jobs report for September later in the day.

Back home, the US said that neither Indian nor American government has stated that there will be a trade agreement in five minutes but it does not see any structural reason which might stop both the nations to have a trade agreement pretty quickly. In scrip specific developments, Indian Hotels Company rose after Anheuser Busch InBev (AB InBev) signed an agreement with the company to launch a premium chain of microbreweries within its marquee hotels across key locations in India. This collaboration is worth Rs 150 crore with plans to open 15 microbreweries over the next five years. UCO Bank jumped after its Board of Directors approved the proposal for the issue of equity shares on preferential basis to Government of India against capital infusion of Rs 2130 crore.

The BSE Sensex is currently trading at 38279.33, up by 172.46 points or 0.45% after trading in a range of 38258.08 and 38403.54. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.21%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were IT up by 0.67%, TECK up by 0.53%, Bankex up by 0.41%, Consumer Durables up by 0.37% and Healthcare was up by 0.32%, while Oil & Gas down by 0.54%, Metal down by 0.50%, PSU down by 0.37%, Realty down by 0.35% and Basic Materials was down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.41%, Indusind Bank up by 1.58%, Hero MotoCorp up by 1.48%, HDFC up by 1.21% and Tech Mahindra up by 1.07%. On the flip side, Tata Motors - DVR down by 2.10%, Tata Motors down by 1.51%, Mahindra & Mahindra down by 0.78%, Larsen & Toubro down by 0.69% and HCL Technologies down by 0.65% were the top losers.

Meanwhile, with an aim to push economy to a high growth trajectory, Niti Aayog CEO Amitabh Kant has said that there will be many more structural reforms by the government in the coming days. He added that recently, the government announced a series of economic boosters including capitalisation of public sector banks, merging some of them, package for exports, and bringing down corporate tax rate.

He said ‘the RBI and the government have taken a series of measures to take India back to a high trajectory of growth. The RBI has dropped repo rate by about 110 basis points (in 2019 so far) but there are limitations to monetary policy and therefore the government stepped in and took a series of measures.’ He further said ‘I think many more structural reforms are in the offing. The government has pushed for public sector disinvestment. I can tell you we have pushed for asset monetisation in a very big way. Our belief is that instead of green-field projects, investors must come into brown-field projects.’

Kant noted that the step to bring down the corporate tax rate was to align it with global standards and he also said the government must be a facilitator, a catalyst and should keep itself out of business. He highlighted that in the last five years, the economy has grown at about 7.5 per cent. The country's growth rate of 8.1 per cent in the last quarter of 2017-18 has fallen to 5 per cent in April-June, 2019-20.

The CNX Nifty is currently trading at 11351.10, up by 37.10 points or 0.33% after trading in a range of 11350.15 and 11400.30. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 4.12%, Indusind Bank up by 2.09%, Hero MotoCorp up by 1.40%, Wipro up by 1.40% and SBI up by 1.38%. On the flip side, Zee Entertainment down by 3.26%, Grasim Industries down by 1.88%, Indian Oil Corporation down by 1.85%, Tata Motors down by 1.55% and JSW Steel down by 1.51% were the top losers.

Asian markets were mostly trading in red; Hang Seng decreased 140.97 points or 0.54% to 25,969.34, Taiwan Weighted dropped 13.06 points or 0.12% to 10,862.85, Straits Times trembled 11.16 points or 0.36% to 3,076.81 and Nikkei 225 slipped 4.25 points or 0.02% to 21,337.49. On the flip side, KOSPI rose 0.34 points or 0.02% to 2,032.25 and Jakarta Composite was up by 22.75 points or 0.38% to 6,061.28.