Bourses bounce back in green after yesterday's drubbing

Indian equity bourses bounced back in green terrain on Friday after yesterday's drubbing, with Sensex & Nifty closing higher by over 0.60% each. The start of the day was firm, aided 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. But, volatility hit markets in noon deals, as Ind-Ra slashed India’s GDP growth forecast for FY20 to 6.1% for the second time in two months.

Despite some volatility, key benchmarks managed to trade in green, taking support 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 support also came with 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. Separately, 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.

On the global front, European markets were trading in green, as Spain's consumer price inflation eased as initially estimated, hitting the lowest in more than three years in September. The final data from the statistical office INE showed that the consumer price index edged up 0.1 percent year-on-year in September, following a 0.3 percent rise in August. Asian markets ended in green, after Malaysia's industrial production grew at a faster pace in August. The data from the Department of Statistics showed that industrial production rose 1.9 percent year-on-year in August, following a 1.2 percent rise in July. Manufacturing output growth slowed to 3.7 percent from 4.0 percent in the previous month.

Back home, auto sector stocks ended higher, despite data released by the Society of Indian Automobile Manufacturers showed that domestic passenger vehicle sales declined 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. Further, airlines stocks remained in watch, after International Air Transport Association (IATA) in its latest data showed that India slipped to the fourth place in domestic air passenger traffic in August 2019 with passenger volume rising 3.7 percent in the month over the period year-ago, reflecting the deepening crisis in the economy spawned by slumping consumer demand.

Finally, the BSE Sensex gained 246.68 points or 0.65% to 38,127.08, while the CNX Nifty was up by 70.50 points or 0.63% to 11,305.05.

The BSE Sensex touched a high and a low of 38,345.41 and 37,737.85, respectively and there were 21 stocks advancing against 10 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.24%, while Small cap index was up by 0.38%.

The top gaining sectoral indices on the BSE were Metal up by 2.44%, IT up by 1.74%, TECK up by 1.57%, Basic Materials up by 1.40% and Realty up by 1.20%, while Energy down by 0.41%, Oil & Gas down by 0.41% and Utilities down by 0.08% were the only losing indices on BSE.

The top gainers on the Sensex were Infosys up by 4.19%, Vedanta up by 3.96%, Tata Motors up by 3.81%, Tata Motors - DVR up by 3.56% and ONGC up by 2.95%. On the flip side, Yes Bank down by 3.30%, Mahindra & Mahindra down by 1.19%, TCS down by 0.87%, Reliance Industries down by 0.73% and Indusind Bank down by 0.46% were the top losers.

Meanwhile, Crisil Research in its report has estimated a sharp drop in demand across consumption segments pulled down corporate revenue by 3% in the second quarter of current financial year (Q2FY20). This is the first time in 14 quarters -- three and a half years -- that revenues have fallen in a quarter. It is largely on the back of a sharp drop in demand across consumption segments - excluding that of banking, financial services, insurance and oil companies. In the previous four quarters, i.e. between Q2FY19 and Q1FY20, aggregate revenue had grown 11-12% on an average.

The estimate is based on an analysis of 430 companies, which account for 65% of the market capitalisation, excluding financial services and oil firms, of the National Stock Exchange. CRISIL Research, Senior Director, Prasad Koparkar said, Automobiles, one of the key sectors driven by consumption spending, continues to reel under a demand slowdown. Aggregate revenue of listed automobile players is estimated to have dropped around 25% in the second quarter. In a rub-off, the revenue of automotive component makers is estimated to have fallen 14-16% amid production cuts.

Construction-linked sectors are expected to log an overall decline of 5% on-year in revenue in the second quarter. This is on account of 15% on-year decline in steel products, mainly due to declining realisations, as flat steel prices dropped 14%. Cement players, though, will likely log a 5-6% rise in revenue despite a drop in volumes, given higher realisations. On the industrial side, revenue of petrochemical companies is expected to fall 23-25% due to lower petrochemical realisations amid a fall in feedstock naphtha prices (25% on-year decline) following lower crude oil prices. For companies in power sector, aggregate revenue growth is estimated to have logged a slower pace of 3-4% against an average of 10% in the previous four quarters due to a slowdown in power demand across regions.

The CNX Nifty traded in a range of 11,362.90 and 11,189.40. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Cipla up by 4.71%, Infosys up by 4.08%, Vedanta up by 3.93%, Tata Motors up by 3.72% and ONGC up by 3.15%. On the flip side, Indian Oil Corporation down by 3.31%, Yes Bank down by 2.93%, GAIL India down by 1.77%, Mahindra & Mahindra down by 1.11% and Reliance down by 0.93% were the top losers.

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.