Post Session: Quick Review

Indian equity markets traded with volatility for whole trading session and somehow managed to end in green terrain on Wednesday, on the back of buying by participants amid mostly positive trade in Asian equities. This was the fourth consecutive day of rise for the domestic markets. Markets started the day on optimistic note and traded in fine fettle, 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. Markets also received some support with Reserve Bank data which showed India’s services exports rose by 10.4% to $18.24 billion in August in the current financial year. The services exports or receipts were $16.53 billion in the same month of 2018. It was at $19.08 billion in July this year.

However, markets witnessed some selling in late afternoon session, as traders turned cautious 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. But, selling proved short-lived as markets bounced back in late trade, taking support from World Bank’s report that India has halved its poverty rate since the 1990s and achieved a seven plus growth rate over the last 15 years. India is both critical to the success of global development efforts, including eliminating extreme poverty, and as an influential leader for global goods.

On the global front, Asian markets ended mostly in green, following gains on Wall Street as U.S. earnings season kicked off and investors saw hope for the chances for a larger U.S.-China trade deal. However, European markets were trading in red, as uncertainty over the outcome of London's last-ditch Brexit talks with Brussels kept investors on the sidelines. Back home, Aviation stocks ended lower as rating agency ICRA in its note has said that Indian airlines international air passenger traffic degrew 8.2% in August as against a 3.9% growth in the domestic volume in the same month, with market share declining to 34.2% in the month on account of under-performance. Besides, shipping sector were in focus with Union Minister of State for Shipping Mansukh Mandaviya stating that the government will come up with a comprehensive 'Port Grid and Port Development' plan in six months for 204 minor ports in the country to boost coastal shipping and inland waterways, and bring a Bill in Parliament to provide a fillip to major ports.

The BSE Sensex ended at 38617.21, up by 111.12 points or 0.29% after trading in a range of 38416.67 and 38666.38. There were 16 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index fell 0.13%, while Small cap index was up by 0.17%. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.28%, Energy up by 1.02%, Realty up by 0.97%, TECK up by 0.71% and IT up by 0.69%, while Power down by 1.04%, Utilities down by 0.85%, Metal down by 0.61%, Capital Goods down by 0.34% and Consumer Discretionary Goods & Services down by 0.26% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bajaj Finance up by 3.73%, ONGC up by 2.34%, HDFC up by 2.01%, HCL Tech. up by 1.41% and Yes Bank up by 1.23%. (Provisional)

On the flip side, Hero MotoCorp down by 3.08%, Vedanta down by 2.54%, Asian Paints down by 1.86%, NTPC down by 1.55% and ITC down by 1.52% were the top losers. (Provisional)

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 ended at 11471.55, up by 43.25 points or 0.38% after trading in a range of 11411.10 and 11481.05. There were 30 stocks advancing against 19 stocks declining on the index. (Provisional)

The top gainers on Nifty were BPCL up by 4.31%, Bajaj Finance up by 3.75%, Zee Entertainment up by 3.71%, Grasim Industries up by 3.47% and Yes Bank up by 2.71%. (Provisional)

On the flip side, Hero MotoCorp down by 2.83%, Vedanta down by 2.48%, Hindalco down by 2.36%, Asian Paints down by 1.99% and NTPC down by 1.59% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 13.35 points or 0.19% to 7,198.29, France’s CAC fell 17.69 points or 0.31% to 5,684.36 and Germany’s DAX was down by 6.32 points or 0.05% to 12,623.47.

Asian markets ended mostly higher on Wednesday on expectations that Britain still has a chance of avoiding a messy exit from the European Union. Upbeat earnings results from major US companies too buoyed market sentiment. Hong Kong shares ended higher despite signs of fresh Sino-US tensions over Hong Kong after its Chief Executive, Carrie Lam said the city has slipped into a technical recession since a series of protests began in June. Japanese shares closed higher after weaker yen lifted bluechip exporters, while chipmaking-related stocks advanced following their US peers higher. Japanese shares improved further, according to assessments from regions across Japan, Bank of Japan said that all nine regions across Japan had been either expanding or recovering. Moreover, South Korean shares ended up as the country's central bank lowered its key interest rate, as expected, and left the door open for further easing owing to the continued Sino-US trade disputes and escalating geopolitical risks. However, Chinese shares ended lower on worries that the phase one trade deal could be unravelling.