Benchmarks trade with traction in early deals

Indian equity benchmarks have made a positive start and are trading with traction in early deals on Tuesday following firm cues from US markets coupled with fall in crude oil prices. Traders took some encouragement with the Reserve Bank’s statement that continuing its northward surge, India’s forex kitty has swelled by $1.039 billion to a new life-time high of $440.751 billion for the week ended October 18. Some support also came with World Bank group President David Malpass’ statement that India must undertake financial reforms in three key areas like sound regulations for non-banking financial companies (NBFCs), allow private sector banks in a big way in the banking sector and deepen capital market to aide growth. Besides, Union Steel Minister Dharmendra Pradhan said that India will spend about $1.4 trillion on its infrastructure development in the next five years.

On the global front, Asian markets are trading mostly in red at this point of time, as traders booked some of their profit after positive start. The US markets climbed on Monday as rising optimism for a trade deal with China combined with solid earnings and bets the Federal Reserve will cut rates.

Back home, auto stocks edged higher with Ind-Ra report that automobile retail sales are likely to pick up with an improvement in consumer sentiment during the ongoing festive season due to recent liquidity easing measures announced by the government and on back of favourable monsoons. Reality stocks remained in focus with report that private equity investments in the domestic real estate sector rose by 19% to $3.8 billion during January-September 2019, mostly in commercial properties.

The BSE Sensex is currently trading at 39392.01, up by 141.81 points or 0.36% after trading in a range of 39254.12 and 39406.25. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index declined 0.02%, while Small cap index was up by 0.03%.

The top gaining sectoral indices on the BSE were Auto up by 2.18%, Metal up by 1.57%, Energy up by 0.91%, Industrials up by 0.70% and IT was up by 0.56%, while Telecom down by 3.86%, Consumer Durables down by 0.71%, Power down by 0.66%, Utilities down by 0.57% and FMCG was down by 0.52% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 13.74%, Tata Motors up by 13.59%, Tata Steel up by 3.05%, Mahindra & Mahindra up by 2.85% and Vedanta up by 2.80%. On the flip side, Bharti Airtel down by 3.34%, Yes Bank down by 2.10%, Power Grid Corporation down by 1.31%, Kotak Mahindra Bank down by 1.19% and Asian Paints down by 1.07% were the top losers.

Meanwhile, World Bank group President David Malpass has said that India must undertake financial reforms in three key areas that are sound regulations for non-banking financial companies (NBFCs), allow private sector banks in a big way in the banking sector and deepen capital market to aide growth. He added that the Indian financial sector has made quite a bit of progress. It has made progress in terms of monitoring of assets, the bankruptcy process and deepening of the banking system. He also called for more reforms to support growth. He said ‘Having sound regulations for NBFCs, which is vital to India's overall growth, will help India's financial sector. Prime Minister Modi has the goal of a $5 trillion economy. That's a powerful vision that needs to be assisted by innovations in the financial sector.’

On whether demonetisation has caused lower growth in India, the World Bank chief said ‘Economists made lots of forecasts... They were saying India has been affected by the global environment and has slowed from the higher past growth rates and it is very much related to the slowdown in global growth.’ He said the main policy challenge for the country is to address the sources of softening private consumption and the structural factors behind weak investment. He added that stronger courts, modern land management and land permits and enforcement of contracts will benefit India. He also said that the possibility of setting up fast track courts for dispute resolution should be considered. In order to modernise land management, India could digitise land records, which will facilitate quick transactions.

Malpass also said that global trade uncertainty, Britain's plans of leaving the European Union and the low investment rate in the world were among the factors affecting growth. He said ‘I think what is to be done is to have better growth programmes country by country.’ Besides, he said the World Bank will continue with the $6 billion lending target for India. Ninety-seven projects are currently being executed with loan assistance from the World Bank in India. He said ‘The World Bank right now has 97 projects in India with a commitment of $24 billion. We expect the programmes to continue.’ Praising the recent corporate tax cut, he said ‘India has taken a good step with the recent cut in corporate tax rate which will add to its growth.’

The CNX Nifty is currently trading at 11667.25, up by 40.10 points or 0.34% after trading in a range of 11627.35 and 11670.85. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 13.47%, Tata Steel up by 3.00%, Vedanta up by 2.77%, Mahindra & Mahindra up by 2.57% and JSW Steel up by 1.98%. On the flip side, Bharti Infratel down by 6.43%, Bharti Airtel down by 3.48%, Titan Company down by 1.92%, Yes Bank down by 1.92% and BPCL down by 1.42% were the top losers.

Asian market were mostly trading in red; Hang Seng decreased 106.68 points or 0.4% to 26,784.58,Taiwan Weighted dropped 0.83 points or 0.01% to 11,314.19, Jakarta Composite lost 6.05 points or 0.1% to 6,259.33, KOSPI fell 1.34 points or 0.06% to 2,092.26 and Shanghai Composite declined 12.00 points or 0.4% to 2,968.05.

On the flip side, Nikkei 225 surged 98.01 points or 0.43% to 22,965.28 and Straits Times was up by 20.52 points or 0.64% to 3,206.05.