Post Session: Quick Review

Indian equity benchmarks traded with volatility, but in green terrain, throughout the day and ended with a gain of over half a percent, following positive cues from global markets on hopes of a trade deal between the US and China. Key indices begun day on positive note and traded with decent gains, as traders took encouragement with Union Finance Minister Nirmala Sitharaman’s statement that the government is giving sector-specific solutions to fight the slowdown in economic growth. Hinting at other measures like steps to improve exports, easing credit, making more money available by early repayments to vendors and front-loading of banks recapitalisation, Sitharaman said the government has been working on sector-specific measures. Market participants also took a note of reports that the government set up a high-level committee of officers to look into revenue shortfall being faced by the states and suggest measures for augmenting collections.

However, key indices gave up most of their gains to come off their intraday high points in early noon deals, as market-men got nervous with India Ratings and Research (Ind-Ra) slashing the country’s gross domestic product (GDP) forecast for current fiscal year (FY20) to 6.1% for the second time in two months. Recently, the rating agency had revised its GDP growth estimate to 6.7% in August from of 7.3% in forecasted earlier. But, key indices regained traction in the last leg of trade to end higher, as optimism remained among traders with an EEPC India’s analysis report showing that India's engineering exports to China have gone up by an annualised 58 per cent in August, 2019, bucking the trend of drop in overall exports to the world market. Some optimism also came with a report indicating that India jumped two levels to 7th position in the Brand Finance Nation ranking of 2019 despite the reduction in the overall economic growth due to slowdown in the manufacturing and construction sectors. Traders were looking forward to the index of industrial production (IIP) data for August scheduled to be announced after the market hours.

On the global front, Asian markets ended in green on Friday. European markets were trading in green, on optimism around U.S.-China trade talks and London's latest Brexit moves. Back home, select auto stocks ended lower with data released by the Society of Indian Automobile Manufacturers (SIAM) indicating that domestic passenger vehicle sales dropped by 23.69 percent in September to 2,23,317 units, down from 2,92,660 units in the year-ago period, making it the 11th consecutive month of decline in vehicle off-take. Banking stocks too ended lower with latest data from the Reserve Bank showing that for the first time this fiscal, bank credit growth slowed to single digit, printing in at a low 8.79 percent at Rs 97.71 lakh crore in the fortnight to September 27.

The BSE Sensex ended at 38101.84, up by 221.44 points or 0.58% after trading in a range of 37737.85 and 38345.41. There were 21 stocks advancing against 10 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.22%, while Small cap index was up by 0.34%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.46%, IT up by 1.53%, TECK up by 1.41%, Basic Materials up by 1.40% and Telecom up by 1.11%, while Energy down by 0.43%, Oil & Gas down by 0.40% and Utilities down by 0.08% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Vedanta up by 4.49%, Tata Motors up by 3.93%, Infosys up by 3.89%, Tata Motors - DVR up by 3.27% and ONGC up by 3.15%. (Provisional)

On the flip side, Yes Bank down by 3.30%, Mahindra & Mahindra down by 1.18%, TCS down by 0.96%, Reliance Industries down by 0.76% and Indusind Bank down by 0.41% were the top losers. (Provisional)

Meanwhile, India Ratings and Research (Ind-Ra) has slashed the country’s gross domestic product (GDP) forecast for current fiscal year (FY20) to 6.1% for the second time in two months. Recently, the rating agency had revised its GDP growth estimate to 6.7% in August from of 7.3% in forecasted earlier. The cut in forecast follows the Central Statistical Organisation (CSO) recent estimate of first quarter (April-June) growth at 5%, which came in lower than India Ratings’ estimate of 5.7%.

Rating agency said although India Ratings had cited a slowdown in both urban and rural consumption demand growth as one of the key reasons for the downward revision of GDP in its August 2019 forecast, CSO’s first quarter estimate shows that the slowdown has been much sharper than expectation. It expects the first half GDP growth to be 5.2%, and recover to 6.9% in the second half of the current fiscal, mainly on account of the base effect.

The slowdown in consumption demand is reflected in the Reserve Bank of India’s (RBI) Consumer Confidence Index as well, that declined to 89.4 in September 2019 (95.7 in July 2019). The other key indicators that have worsened lately are aggregate capacity utilisation declining to 73.6% in the first quarter, banking credit to commercial sector turning negative at Rs 1,287 billion in the first half and non-banking credit to commercial sector falling to Rs 2,197 billion in the same half of the current fiscal.

Besides, private consumption fell to 3.1% in the first quarter, from 7.2% in the previous one and 7.3% in the same quarter a year ago. The report highlighted that demand the bigger challenge facing the economy owing to a collapse in consumption demand, while private investment is not forthcoming. The 2019-20 fiscal deficit has been budgeted at 3.3% of the GDP. As per the report, tax revenue in 2019-20 may fall short of the budgeted figure by around Rs 1,500 billion, similar to the tax revenue shortfall observed in the last fiscal. It added that the fiscal deficit could increase to 3.6% of GDP in 2019-20.

The CNX Nifty ended at 11299.90, up by 65.35 points or 0.58% after trading in a range of 11189.40 and 11362.90. There were 36 stocks advancing against 14 stocks declining on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 4.68%, Cipla up by 4.52%, Tata Motors up by 3.90%, Infosys up by 3.82% and ONGC up by 3.07%. (Provisional)

On the flip side, Indian Oil Corp. down by 3.27%, Yes Bank down by 3.17%, GAIL India down by 1.85%, Mahindra & Mahindra down by 1.04% and Zee Entertainment down by 1.00% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 16.91 points or 0.24% to 7,203.27, France’s CAC rose 66.87 points or 1.2% to 5,635.92 and Germany’s DAX was up by 242.86 points or 2% to 12,407.06.

Asian markets ended higher on Friday as investors cheered signs of progress in trade talks between the United States and China. US President Donald Trump on Thursday hinted at progress in his high-stakes trade battle with China. Separately, Chinese state news agency Xinhua reported Liu said Beijing was willing to reach an agreement with Washington to prevent any further escalation of the trade war. Japanese shares ended higher as the safe-haven yen eased on hopes of progress in Sino-US trade talks. The trade sentiment was also buoyed by a sharp jump in Seven & I Holdings, the country's largest convenience store operator, after it announced a massive restructuring plan. Furthermore, Malaysian shares gained after data showed that the country's industrial production rose 1.9% in August from a year earlier. Meanwhile, Taiwan's market is closed for a holiday today.