Post Session: Quick Review

Indian equity benchmarks erased major chunk of gains in dying hour of trade to come off their intraday high points, but managed to close the session with moderate gains. Initially, it was a positive start to the markets, as traders took some support from the report that even after the flurry of sops given to various industries after the budget, Union MSME Minister Nitin Gadkari has said the government will create a special financial scheme for 10 industry segments which are import-driven. He said the government has created a scheme to support industries where imports are high by providing special financial assistance.  Sentiments remained largely positive with Union Minister Pratap Chandra Sarangi’s statement that the MSME sector plays a crucial role in achieving the Centre's target of making the country $5 trillion economy. He said the MSME sector is the largest employment generator after agriculture in the country. Investors took note of a report that in a relief to taxpayers, the government extended the due dates for filing GST annual returns for 2017-18 to December 31 and for the financial year 2018-19, to March 31 next year. The dates for filing the reconciliation statement has also been extended accordingly. In another relief, it has also decided to simplify the two GST forms by making various fields of these forms as optional.

However, markets trimmed major of their gains in the last leg of the trade, as anxiety turned among the investors after Moody’s Investors Services has cut its forecast for India’s 2019 (calendar) GDP growth by 60 bps to 5.6%, in what reflected a continuing trend of such downward revisions by prominent domestic and foreign agencies. Some cautiousness came with a report that headline inflation is bound to rise further to 5% for November, but despite the pinch in price rise, the Reserve Bank will go for two consecutive rate cuts on growth concerns. Some pessimism also spread among the investors with SBI research’s report which showed that surplus rainfall in August and September is likely to keep food and vegetable prices elevated going forward, and retail inflation may average at around 4% in FY20.

On the global front, Asian markets ended mostly higher, on White House comments suggesting Washington and Beijing were close to striking a trade deal, reviving hopes the tariff war may near an end. European markets were trading in green, after White House economic adviser Lawrence Kudlow said that the US and China are getting close to a 'phase one' agreement on trade. He cited 'very good progress' but added President Donald Trump is not ready to make a commitment. Back home, telecom stock ended on a higher note as a private report stated that the committee has sought recommendations from the Department of Telecom (DoT) on setting a minimum charge for all tariffs for telecom players and also assessing the impact it will have on telecom operators.

The BSE Sensex ended at 40316.17, up by 29.69 points or 0.07% after trading in a range of 40308.09 and 40650.06. There were 12 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended in mixed; the BSE Mid cap index gained 0.62%, while Small cap index was down by 0.15%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 8.85%, BANKEX up by 0.79%, TECK up by 0.64%, PSU up by 0.62% and Healthcare was up by 0.56%, while Power down by 0.90%, FMCG down by 0.66%, IT down by 0.55%, Oil & Gas down by 0.55% and Auto was down by 0.50% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 8.78%, SBI up by 5.29%, Tata Motors - DVR up by 2.22%, Kotak Mahindra Bank up by 1.56% and Tata Motors was up by 1.23%. (Provisional)

On the flip side, Hero MotoCorp down by 2.15%, ITC down by 1.50%, Maruti Suzuki down by 1.46%, Vedanta down by 1.39% and NTPC was down by 1.31% were the top losers. (Provisional)

Meanwhile, Moody's Investors Service in its latest report has slashed India’s gross domestic product (GDP) growth forecast to 5.6 percent for the year 2019 from 5.8 percent projected earlier, pointing out that the measures taken by the government do not address the widespread weakness in consumption demand. It also expects that economic activity will pick up in 2020 and 2021 to 6.6 percent and 6.7 percent, respectively, but the pace to remain lower than in the recent past.

According to the report, the country’s economic growth has decelerated since mid-2018, with real GDP growth falling from nearly 8 percent to 5 percent in the second quarter of 2019 and joblessness rising. It also said investment activity was muted well before that, but the economy was buoyed by strong consumption demand. It added that what is troubling about the current slowdown is that consumption demand has cooled notably.

The report further stated that the government has undertaken a number of measures to arrest the growth slowdown. In September, the government announced a cut in the corporate tax rate to 22 per cent from 30 per cent. The government also lowered the tax rate for new manufacturing companies to 15 per cent to attract new foreign direct investments. Besides, it noted that the government's other initiatives include bank recapitalization, the mergers of 10 public sector banks into four, support for the auto sector, plans for infrastructure spending, as well as tax benefits for startups. However, it said that none of these measures directly address the widespread weakness in consumption demand, which has been the chief driver of the economy.

The CNX Nifty ended at 11895.30, up by 23.20 points or 0.20% after trading in a range of 11879.25 and 11973.65. There were 18 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Infratel up by 9.71%, Bharti Airtel up by 8.69%, SBI up by 5.56%, Zee Entertainment up by 3.90% and Grasim Industries was up by 3.05%. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 18.84 points or 0.26% to 7,311.60, France’s CAC increased 39.89 points or 0.68% to 5,940.97 and Germany’s DAX was up by 50.11 points or 0.38% to 13,230.34.

Asian markets ended mostly higher on Friday on revived hopes of a Sino-US trade deal. White House economic adviser Larry Kudlow said that phase one of a trade deal between the world’s two largest economies was getting close, while Chinese Ministry of Commerce spokesman Gao Feng continued Beijing’s call for a removal of existing tariffs. Japanese shares ended higher as the safe-haven yen weakened. The sentiment also improved further after overnight data showed Japan’s final industrial production advanced 1.3% on an annual basis in September, compared to a fall of 4.7% in the previous month. Market participants and preliminary figures had indicated industrial production to register a rise of 1.1%. Though, Chinese shares closed lower, despite China's central bank unexpectedly adding liquidity to the banking system to help lenders through the tax season. Investors also ignored data showing that China's house prices logged a moderate growth in October.