Benchmarks trade tad above neutral lines in early deals

Indian equity benchmarks made optimistic start but soon pared some gains and are trading tad above neutral lines in early deals on Monday. Gains across sectors - led by Telecom, Basic Materials and PSU shares - supported the up move in the markets. Traders took encouragement with report that FPIs pumped in a net sum of Rs 19,203 crore into the domestic capital markets in the first half of November amid encouraging domestic and global factors. Adding optimism, the RBI’s data showed that foreign exchange reserves continued their upward march surging $1.710 billion to touch a new high of $447.81 billion in the week to November 8. Traders took note of that in a bid to ease the flow of foreign funds into legitimate business activities, the government may soon ease restrictions on foreign direct investment (FDI) by joint ventures (JVs) or wholly-owned subsidiaries (WOS) of an Indian company without categorising such investments as suspect involving round tripping of funds. However, upside remained capped amid concern over economic growth. Economic think-tank NCAER said that the country's GDP growth is likely to decline to 4.9 per cent in the second quarter of this fiscal due to sustained slowdown in virtually all the sectors. Also, the government data showed that India’s exports dipped by 1.11% to $26.38 billion in October on account of contraction in sectors like petroleum and leather. Meanwhile, the Winter Session of the Parliament begins today, 18 November 2019.

Global cues remained supportive with most of the Asian markets were trading in green as investors awaited further progress on a potential US-China trade deal. As per the report, the US and China had ‘constructive discussions’ regarding a phase-one trade deal in a high-level phone call. Though, the ongoing protests in Hong Kong also weighed on sentiment. Back home, telecom stocks were trading higher with Finance Minister Nirmala Sitharaman’s statement that the government intends to address the concerns of the crisis-ridden telecom companies which are facing billions of dollars of fresh statutory liability following a recent Supreme Court ruling. In scrip specific development, Tata Motors gained as it received approval for allotment of 5000 Rated, Listed, Unsecured, Redeemable, Non-Convertible Debentures (NCDs) E28-A Series of face value Rs 10 lakh each, at par, aggregating to Rs 500 crore in three tranches, on private placement basis.

The BSE Sensex is currently trading at 40368.29, up by 11.60 points or 0.03% after trading in a range of 40333.03 and 40542.40. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.15%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Telecom up by 3.28%, Basic Materials up by 0.57%, PSU up by 0.48%, Healthcare up by 0.45% and Capital Goods was up by 0.41%, while Auto down by 0.34%, FMCG down by 0.33%, IT down by 0.32%, Realty down by 0.27% and Consumer discretionary was down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.29%, SBI up by 1.43%, Indusind Bank up by 1.07%, Sun Pharma up by 1.02% and Tata Steel up by 0.90%. On the flip side, Yes Bank down by 1.67%, ONGC down by 1.44%, Mahindra & Mahindra down by 1.41%, Asian Paints down by 0.77% and HDFC Bank down by 0.75% were the top losers.

Meanwhile, with sustained slowdown in almost all the sectors, economic think-tank National Council of Applied Economic Research (NCAER) has said that India’s economic growth is likely to decline to 4.9% in the second quarter of this fiscal (Q2FY20). Earlier, the country's economy grew at 5% in the first quarter of 2019-20 - the slowest pace in over six years. Besides, the think-tank has pegged Gross Domestic Product (GDP) growth at 4.9% as for the full fiscal 2019-20 against 6.8% in 2018-19.

NCAER further said the monetary policy measures are unlikely to revive growth at this juncture and suggested providing fiscal stimulus, which too can be challenging unless it can be financed through better revenue generation. It said ‘whether the growth deceleration may be bottoming out or not, we will know in next two weeks based on the Q2 growth figures of the government. However, the current poor growth is mainly due to a demand problem. It can be addressed through fiscal measures.’

Stressing that the focus should be on fiscal measures, it said there is a need to pump up expenditure without pushing up the fiscal deficit. It said that there are ways of doing it and added that there is a huge fiscal space which has not been used. It is myth that some say there is no fiscal space. It said revenue foregone is 5% of the country's GDP and about 1.5% of GDP is locked up as excess appropriation of the budget which has not been spent. Even the government is not paying the bills. It said ‘so, there is a lot of fiscal space, but you need take tough measures. First of all, we need to reduce exemptions on indirect tax custom duties. There was no need to reduce corporate tax. Are companies investing after that this makes the position worse.’

The CNX Nifty is currently trading at 11901.60, up by 6.15 points or 0.05% after trading in a range of 11890.15 and 11946.20. There were 25 stocks advancing against 24 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Bharti Airtel up by 3.28%, BPCL up by 2.97%, Grasim Industries up by 2.87%, Bharti Infratel up by 2.11% and SBI up by 1.55%. On the flip side, GAIL India down by 1.77%, Yes Bank down by 1.53%, Mahindra & Mahindra down by 1.48%, ONGC down by 1.48% and Coal India down by 1.27% were the top losers.

Asian markets were mostly trading in green; Hang Seng increased 292.11 points or 1.11% to 26,618.77, Nikkei 225 surged 77.88 points or 0.33% to 23,381.20, Taiwan Weighted strengthened 42.37 points or 0.37% to 11,567.97, Shanghai Composite gained 16.78 points or 0.58% to 2,908.12 and Straits Times advanced 9.37 points or 0.29% to 3,248.23. On the flip side, KOSPI fell 7.85 points or 0.36% to 2,154.33 and Jakarta Composite was down by 18.59 points or 0.3% to 6,109.76.