Markets trade on day’s high

Indian equity benchmarks were trading on their intraday high points in late afternoon session, despite weak cues from European markets. The street remained enthusiastic as India’s Wholesale price index (WPI) inflation fell sharply at 0.33% in the month of September 2019 as against 1.08% (provisional) for the previous month and 5.22% during the corresponding month of the previous year. Besides, Finance Minister Nirmala Sitharaman assured investors that India will honour contractual commitments under various energy agreements.

On the global front, European markets were trading in red, despite Eurozone industrial production expanded in August after easing for two straight months. The data from Eurostat showed that industrial output grew 0.4 percent month-on-month, offsetting a 0.4 percent fall in July. This was the first rise in three months. Production was forecast to climb 0.3 percent. However, Asian markets were trading in green.

Back home, telecom stocks were in watch, amid reports that Fair trade regulator the Competition Commission of India (CCI) will conduct a study about the Indian telecom sector to assess various competition aspects as the market dynamics have undergone significant changes in the recent past.

The BSE Sensex is currently trading at 38468.62, up by 341.54 points or 0.90% after trading in a range of 38066.13 and 38513.69. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.88%, while Small cap index was up by 0.44%.

The top gaining sectoral indices on the BSE were Realty up by 2.61%, Telecom up by 2.40%, Auto up by 1.92%, Metal up by 1.82%, Bankex up by 1.60%, while IT down by 0.63% and TECK down by 0.22% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 7.15%, Tata Motors up by 6.76%, ONGC up by 4.49%, Indusind Bank up by 3.10% and Bharti Airtel up by 3.07%. On the flip side, Infosys down by 3.16%, Power Grid down by 0.70%, Bajaj Finance down by 0.67% and Tech Mahindra down by 0.12% were the top losers.

Meanwhile, citing a broad-based and severe cyclical slowdown, the World Bank has slashed its economic growth forecast for India to 6% for the current fiscal (FY20) from its April projection of 7.5%. It also warned that the severe slowdown could further weaken the country’s stuttering financial sector. In 2018-19, the growth rate of the country stood at 6.9%, down from 7.2% in the 2017-18 financial year. However, the bank in its latest edition of the South Asia Economic Focus said growth is expected to gradually recover to 6.9% in 2020-21 and 7.2% in 2021-22 as the cycle bottoms-out, rural demand benefits from effects of income support schemes, investment responds to tax incentives and credit growth resumes. Besides, exports growth is expected to remain modest, as trade wars and slow global growth depresses external demand.

The World Bank report said reflecting on the below-trend economic momentum and persistently low food prices, the headline inflation averaged 3.4% in 2018-19 and remained well below the Reserve Bank of India’s (RBI’s) mid-range target of 4% in the first half of 2019-2020. This allowed the RBI to ease monetary policy via a cumulative 135 basis point cut in the repo rate since January 2019 and shift the policy stance from ‘neutral’ to ‘accommodative’. It also noted that the current account deficit had widened to 2.1% of the GDP in 2018-19 from 1.8% a year before, mostly reflecting a deteriorating trade balance.

However, the report said disruptions brought about by the introduction of the GST and demonetisation, combined with the stress in the rural economy and a high youth unemployment rate in urban areas may have heightened the risks for the poorest households. The significant slowdown in the first quarter of the fiscal year and high frequency indicators, thereafter, suggested that the output growth would not exceed 6% for the full fiscal year. It said the consumption was likely to remain depressed due to slow growth in rural income, domestic demand (as reflected in a sharp drop in sales of automobiles) and credit from NBFCs. Though, the investment would benefit from the recent cut in effective corporate tax rate for domestic companies in the medium term, but also will continue to reflect financial sector weaknesses.

The CNX Nifty is currently trading at 11400.25, up by 95.20 points or 0.84% after trading in a range of 11290.05 and 11420.45. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 6.60%, ONGC up by 4.34%, JSW Steel up by 3.13%, Indusind Bank up by 2.93% and Bharti Airtel up by 2.89%. On the flip side, Infosys down by 3.08%, Power Grid down by 0.87%, Bajaj Finance down by 0.63%, UPL down by 0.48% and Cipla down by 0.40% were the top losers.

Asian markets were trading in green; KOSPI rose 22.79 points or 1.11% to 2,067.40, Taiwan Weighted strengthened 176.99 points or 1.63% to 11,066.95, Straits Times advanced 12.53 points or 0.4% to 3,126.50, Jakarta Composite soared 19.22 points or 0.31% to 6,125.02, Hang Seng increased 222.09 points or 0.84% to 26,530.53 and Shanghai Composite was up by 30.58 points or 1.03% to 3,004.24.

All European markets were trading in red; FTSE lost 32.86 points or 0.45% to 7,214.22, CAC fell 37.42 points or 0.66% to 5,628.06 and DAX was down by 62.66 points or 0.50% to 12,448.99.