Markets trade slightly higher in early deals

After a holiday, Indian equity benchmarks made subdued start and soon turned positive in early deals on Wednesday. The domestic stock market remained closed on Tuesday for Gurunanak Jayanti. Markets are trading higher with marginal gains as investors digested weak industrial output data and are eyeing retail inflation numbers to be out later in the day. Some support came as Defence Minister Rajnath Singh exuded confidence that India will become a $10 trillion economy in the next 10 to 15 years. Traders took note of the Reserve Bank of India’s (RBI) data showing that after remaining net seller of the US dollar for two consecutive months, the RBI turned net purchaser of the greenback after it bought $5.614 billion in September. However, upside remained capped as an SBI research report sharply cut the country's GDP growth forecast to 5% for FY 2019-20 from the earlier projection of 6%. It said the second-quarter GDP growth rate is likely to slip to 4.2% on account of low automobile sales, deceleration in air traffic movements, flattening of core sector growth and declining investment in construction and infrastructure. Meanwhile, showing signs of sluggishness in the economy, industrial production shrunk by 4.3% in September, registering the weakest performance in seven years due to output decline in manufacturing, mining and electricity sectors.

On the global front, all the Asian markets were trading lower on Wednesday after a speech by US President Donald Trump at the Economic Club of New York failed to provide any new information about the state of trade talks between the US and China. Trump claimed the Chinese are ‘dying to make a deal’ and an agreement is ‘close’, but also threatened further increases in tariffs if a trade deal is not reached. In addition, worries about the growing unrest in Hong Kong weighed on the markets.

Back home, Auto stocks were in focus with industry body Society of Indian Automobile Manufacturers’ (SIAM) statement that passenger vehicle sales in India rose marginally by 0.28% to 2,85,027 units in October, from 2,84,223 units in the year-ago period, aided by positive festive season sentiment and introduction of new models in utility vehicle space. In scrip specific development, Yes Bank gained amid reports that Sunil Munjal, chairman of Hero Corporate Services, and Hemendra Kothari, veteran investment banker and founder of DSP Group, have held separate talks with Yes Bank to purchase stakes of 5-10% each in the cash-starved private lender. However, Infosys came under pressure amid report that a new whistleblower complaint that alleged IT major's chief executive officer Salil Parekh of committing misdeeds and urged the chairman and the board of directors to act against him.

The BSE Sensex is currently trading at 40413.55, up by 68.47 points or 0.17% after trading in a range of 40279.11 and 40447.17. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.49%, while Small cap index was down by 0.07%.

The top gaining sectoral indices on the BSE were Energy up by 0.88%, Consumer Durables up by 0.63%, Power up by 0.44%, FMCG up by 0.38% and Metal was up by 0.31%, while Telecom down by 0.43%, Realty down by 0.33%, TECK down by 0.06%, Capital Goods down by 0.04% and PSU was down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 1.99%, TCS up by 1.74%, Reliance Industries up by 1.32%, Hindustan Unilever up by 0.62% and Asian Paints up by 0.62%. On the flip side, Infosys down by 1.20%, SBI down by 0.53%, Bharti Airtel down by 0.50%, ICICI Bank down by 0.47% and ONGC down by 0.36% were the top losers.

Meanwhile, amid economic growth slowdown, State Bank of India’s (SBI) Economic Research Department in its Ecowrap report has sharply cut India’s Gross Domestic Product (GDP) growth forecast to 5% for Fiscal Year 2019-20 (FY20) from the earlier projection of 6%. In its report, it said the second quarter GDP growth rate is likely to slip to 4.2% on account of low automobile sales, deceleration in air traffic movements, flattening of core sector growth and declining investment in construction and infrastructure. Though, it also said the economic growth rate will pick up pace in 2020-21 to 6.2%.

In order to propel economic growth, the report said the Reserve Bank of India (RBI) may go for ‘larger rate cuts’ in December monetary policy review. In October, while reducing the key policy rate (repo) by 25 basis points for the fifth time in a row, the RBI had also reduced its growth forecast to 6.1% for 2019-20 from 6.9%. Besides, India’s GDP growth had dipped to about a six-year low of 5% in the first quarter of the current fiscal year.

Terming the decline in September IIP by 4.3% as quite alarming, it said ‘our acceleration rate for 33 leading indicators at 85% in October 2018 is down to just 17% in September 2019, with such decline gaining traction from March 2019’. The report further said that the growth rate in 2019-20 should be looked through the prism of synchronised global slowdown (countries have witnessed 22-716 basis point decline between June 2018 and June 2019, and India cannot be isolated). India is also significantly lower in Economic Uncertainty Index when compared globally.

The CNX Nifty is currently trading at 11928.20, up by 14.75 points or 0.12% after trading in a range of 11895.45 and 11946.80. There were 25 stocks advancing against 24 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Britannia Industries up by 5.33%, TCS up by 1.76%, Yes Bank up by 1.51%, Nestle up by 1.46% and Reliance Industries up by 1.27%. On the flip side, Zee Entertainment down by 3.27%, GAIL India down by 2.15%, Infosys down by 1.36%, Hindalco down by 0.67% and SBI down by 0.64% were the top losers.

All Asian markets were trading in red; Hang Seng decreased 477.47 points or 1.76% to 26,587.81, Nikkei 225 slipped 206.27 points or 0.88% to 23,313.74, Taiwan Weighted dropped 51.99 points or 0.45% to 11,468.38, Straits Times trembled 20.01 points or 0.61% to 3,247.79, KOSPI fell 19.14 points or 0.89% to 2,121.78, Jakarta Composite lost 8.99 points or 0.15% to 6,172.00 and Shanghai Composite was down by 4.27 points or 0.15% to 2,910.55.