Markets trade in fine-fettle in early deals

Indian equity benchmarks made optimistic start and are trading in fine-fettle with gains of over a percent each in early deals on Friday. Gains in banking, financial services and metal shares pushed the markets higher, however losses in IT and Telecom stocks kept the upside in check. Investors are looking ahead to the India's industrial production data for August 2019 to be announced later in the day. Traders took some 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 note that with the Goods and Services Tax (GST) collections dropping sharply to a 19-month low in September, the government has constituted a committee of officers to suggest measures to augment collections, expand the tax base and check evasion. On the sectoral front, Aviation stocks were in focus with International Air Transport Association (IATA) data showing that India slipped to the fourth position in domestic air passenger traffic in August with passenger volume growing 3.7 percent in the month over the period year-ago, reflecting the deepening crisis in the economy spawned by slumping consumer demand.

Global cues also remained supportive with all the Asian markets were trading in green following the positive cues overnight from Wall Street amid optimism about US-China trade talks. US President Donald Trump revealed he plans to meet with Chinese Vice Premier Liu He later today, raising hopes that the two countries would reach a deal to end their protracted trade war. Meanwhile, Japan will provide September numbers for money stocks today.

Back home, in scrip specific development, Tata Steel jumped as its crude steel production increased by 4.65% to 4.5 million tonne (MT) in second quarter ended September 30, 2019, (Q2FY20) as against 4.3 MT in the corresponding quarter last fiscal. However, Tata Consultancy Services (TCS) came under pressure after reporting lower than expected result for the September-quarter of current fiscal (FY20). The company has reported 1.78% rise in its consolidated net profit at Rs 8042 crore for the quarter under review as compared to Rs 7,901 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 38298.86, up by 418.46 points or 1.10% after trading in a range of 37961.08 and 38305.27. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.90%, while Small cap index was up by 0.65%.

The few gaining sectoral indices on the BSE were Metal up by 3.05%, Bankex up by 2.05%, Basic Materials up by 1.89%, Capital Goods up by 1.22% and Auto was up by 1.18%, while Telecom down by 0.93%, TECK down by 0.45%, IT down by 0.39% and Healthcare was down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 4.03%, Tata Steel up by 3.79%, SBI up by 2.74%, ONGC up by 2.47% and Tata Motors up by 2.44%. On the flip side, TCS down by 2.87%, Tech Mahindra down by 1.46%, Bharti Airtel down by 0.93% and Reliance Industries down by 0.15% were the top losers.

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 is currently trading at 11352.30, up by 117.75 points or 1.05% after trading in a range of 11256.70 and 11362.90. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 4.57%, Hindalco up by 3.54%, Tata Steel up by 3.33%, JSW Steel up by 2.95% and Coal India up by 2.57%. On the flip side, TCS down by 2.77%, Cipla down by 2.56%, Tech Mahindra down by 1.03%, Indian Oil Corporation down by 0.81% and Bharti Infratel down by 0.72% were the top losers.

All Asian markets were trading in green; Hang Seng increased 563.43 points or 2.19% to 26,271.36, Nikkei 225 surged 238.27 points or 1.11% to 21,790.25, Shanghai Composite gained 12.97 points or 0.44% to 2,960.68, Jakarta Composite soared 62.03 points or 1.03% to 6,085.67, Straits Times advanced 21.71 points or 0.7% to 3,111.19 and KOSPI was up by 21.30 points or 1.05% to 2,049.45.