Markets trade firm in early deals amid positive global cues

Extending their previous session’s gains, Indian equity benchmarks made optimistic start and are trading firm in early deals on Wednesday amid positive cues from Asian peers and fall in crude oil prices. Gains in Realty, Oil & Gas and Energy stocks supported the markets, however losses in Utilities, Power and Capital Goods stocks limited the upside. Gains on the markets supported by hopes of more interest rate cuts by the Reserve Bank of India (RBI). A private report stated that the RBI will continue to be accommodative and deliver one more rate cut in the December policy review despite the surprising spike in headline inflation for September. Though, upside remained capped as some cautiousness crept in with the International Monetary Fund (IMF) cutting India’s GDP growth projection for the year 2019 to 6.1%, which is 1.2% down from its April projections and noted that the Indian economy is expected to pick up the next year at 7.0 % in 2020. Traders took note of the government data showing that India's exports contracted by 6.57% to $26 billion in September mainly due to significant dip in shipments from key sectors such as petroleum, engineering, leather, chemicals, and gems & jewellery. Imports too declined by 13.85% to $36.89 billion, narrowing trade deficit to $10.86 billion in September.

Global cues remained supportive as most of the Asian markets were trading higher following the overnight gains on Wall Street as upbeat earnings results from major US companies and optimism about a possible Brexit deal boosted investors’ sentiment. According to reports, European Union and UK negotiators were closing in on a draft Brexit deal. Back home, energy stocks were in focus as Power and New & Renewable Energy Minister R K Singh exuded confidence that India will achieve 175GW of renewable energy target by 2022. He further said India has a huge potential because the (energy) demand. The energy demand will grow at the rate of 7, 8 or 9 per cent. In scrip specific development, Wipro surged on reporting a better-than-expected September-quarter earnings, driven by higher margins. Net profit came in at Rs 2,553 crore as compared to Rs 1,889 crore a year earlier. Its operating margins for the IT services unit rose to 18.1%.

The BSE Sensex is currently trading at 38655.22, up by 149.13 points or 0.39% after trading in a range of 38553.90 and 38666.38. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.48%, while Small cap index was up by 0.61%.

The top gaining sectoral indices on the BSE were Realty up by 1.65%, Oil & Gas up by 1.49%, Energy up by 1.23%, PSU up by 1.07% and Basic Materials was up by 0.85%, while Utilities down by 0.32%, Power down by 0.18%, Capital Goods down by 0.11% and Consumer Durables was down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 3.26%, Yes Bank up by 1.48%, Reliance Industries up by 0.92%, ICICI Bank up by 0.91% and Tata Motors up by 0.91%. On the flip side, Vedanta down by 1.50%, Power Grid Corporation down by 1.02%, ITC down by 0.67%, Hero MotoCorp down by 0.67% and Asian Paints down by 0.61% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its latest World Economic Outlook (WEO) has revised India's Gross Domestic Product (GDP) growth projection to 6.1% for the year 2019, which is 1.2% lower from its April projections of 7.3%. Though, it noted that the Indian economy is expected to pick up the next year at 7.0% in 2020. It said the downward revision relative to the April 2019 WEO of 1.2 percentage points for 2019 and 0.5 percentage point for 2020 reflects a weaker-than-expected outlook for domestic demand.

As per the report, going forward growth will be supported by the lagged effects of monetary policy easing, a reduction in corporate income tax rates, recent measures to address corporate and environmental regulatory uncertainty, and government programs to support rural consumption. It noted that India's economy decelerated further in the second quarter, held back by sector-specific weaknesses in the automobile sector and real estate as well as lingering uncertainty about the health of nonbank financial companies. In India, growth softened in 2019 as corporate and environmental regulatory uncertainty, together with concerns about the health of the nonbank financial sector, weighed on demand.

IMF also said in India, monetary policy and broad-based structural reforms should be used to address cyclical weakness and strengthen confidence. A credible fiscal consolidation path is needed to bring down India's elevated public debt over the medium term. This should be supported by subsidy-spending rationalisation and tax-base enhancing measures. Governance of public sector banks and the efficiency of their credit allocation needs strengthening, and the public sector's role in the financial system needs to be reduced. Reforms to hiring and dismissal regulations would help incentivize job creation and absorb the country's large demographic dividend. Land reforms should also be enhanced to encourage and expedite infrastructure development.

The CNX Nifty is currently trading at 11469.40, up by 41.10 points or 0.36% after trading in a range of 11446.65 and 11479.65. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were BPCL up by 4.73%, Grasim Industries up by 3.79%, Bajaj Finance up by 3.24%, Wipro up by 2.98% and Zee Entertainment up by 2.79%. On the flip side, Vedanta down by 1.76%, Adani Ports & SEZ down by 1.51%, Eicher Motors down by 1.19%, Bharti Infratel down by 1.11% and Cipla down by 1.01% were the top losers.

Asian markets were mostly trading in green; Nikkei 225 surged 234.03 points or 1.05% to 22,441.24, Straits Times advanced 17.49 points or 0.56% to 3,133.66, KOSPI rose 10.06 points or 0.49% to 2,078.23, Taiwan Weighted strengthened 8.82 points or 0.08% to 11,120.62 and Hang Seng increased 2.02 points or 0.01% to 26,505.95. On the flip side, Jakarta Composite lost 4.92 points or 0.08% to 6,153.25 and Shanghai Composite was down by 8.31 points or 0.28% to 2,982.74.