Benchmarks trade tad above their neutral lines in early deals

Indian equity benchmarks made optimistic start but soon turned volatile and are trading tad above their neutral lines in early deals on Thursday. Traders took note of Finance Minister Nirmala Sitharaman’s statement that economic growth might have slowed down but there was no impending threat of a recession. Defending the current state of the Indian economy, the finance minister said that every step that had been taken by the government was aimed at development. Though, markets turned volatile as traders roll over positions in the F&O segment from the near month November 2019 series to December 2019 series. The November 2019 F&O contracts expire today, November 28, 2019. Some cautiousness also came in with report indicating that a majority of economy watchers were quick to point out that Q2FY20 growth rate will be lower than the 5 per cent rise seen in April-June quarter, especially due to the havoc caused by Monsoon rains across India.

Global cues remained sluggish with all the Asian markets were trading in red amid worries that tensions between the US and China over Hong Kong may dampen the prospects for an interim trade deal. Investors turned cautious after Trump signed into law congressional legislation backing protesters in Hong Kong, despite strong objections by China. The release of weak Japanese retail sales data for October also dampened sentiment. The Ministry of Economy, Trade and Industry said that retail sales in Japan plunged a seasonally adjusted 14.4 percent on month in October.

Back home, markets regulator SEBI came out with a framework pertaining to preferential issue as well as institutional placement of units by a listed real estate investment trust (REIT) and infrastructure investment trust (InvIT). In scrip specific development, Balaji Amines surged on receiving the environmental clearance for setting up Organic and Specialty Chemicals Manufacturing Unit in Chincholi MIDC, District Solapur Maharashtr from the Ministry of Environment, Forests & Climate Change, Government of India.

The BSE Sensex is currently trading at 41045.01, up by 24.40 points or 0.06% after trading in a range of 41022.81 and 41163.79. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.30%, while Small cap index was up by 0.10%.

The top gaining sectoral indices on the BSE were Telecom up by 0.78%, IT up by 0.51%, TECK up by 0.50%, Bankex up by 0.41% and Metal was up by 0.30%, while FMCG down by 0.25%, Power down by 0.24%, Auto down by 0.23%, Utilities down by 0.14% and Consumer Discretionary was down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 2.12%, ICICI Bank up by 1.64%, TCS up by 1.33%, Tata Steel up by 1.02% and SBI up by 0.55%. On the flip side, Tata Motors - DVR down by 1.55%, Tata Motors down by 1.00%, Hindustan Unilever down by 0.88%, Vedanta down by 0.71% and Bajaj Finance down by 0.59% were the top losers.

Meanwhile, talking about the economic situation of India, Finance Minister Nirmala Sitharaman has said that the growth may have slowed down but the economy will never slip into recession. She added that steps taken by the government post her maiden budget have started bearing fruits and some sectors such as automobiles have shown signs of recovery. Allaying concerns over revenue position of the government, she said direct tax and GST collections have both seen an increase in the first seven months of the current fiscal when compared to the same period of the last year.

She said ‘every step being taken is in the interest of the country. Looking at the economy in discerning view, you see that growth may have come down but it is not recession yet, it won't be recession ever’. Besides, the country’s growth outlook has weakened sharply this year, with a crunch that started with the non-banking finance institutions spreading to retail businesses, car-makers, home sales and heavy industries. The Indian economy expanded by 5% in April-June, its slowest annual pace since 2013 and the projections are that it may have slowed down further in the second quarter, making six consecutive quarters of slowing growth, a first since 2012. This despite a recent series of fiscal stimulus, including a reduction in corporate tax rates.

The Minister attributed the fall in GDP growth in the last two financial years to the lagged effect of twin balance sheet crisis of stress on banks due to non-performing assets (NPAs) or bad loans on the one hand and heavily indebted corporates on the other, resulting from the UPA regime lending. She said capital infusion of Rs 70,000 crore in banks, flowing from that speech, had led to rise in the ability of banks to lend and over Rs 2.5 lakh crore has been given in loans during the recent outreach programme. She added that reforms such as Insolvency and Bankruptcy Code are yielding results.

The CNX Nifty is currently trading at 12112.10, up by 11.40 points or 0.09% after trading in a range of 12099.95 and 12138.30. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 4.66%, UPL up by 3.25%, Yes Bank up by 2.27%, ICICI Bank up by 1.81% and TCS up by 1.40%. On the flip side, Zee Entertainment down by 1.53%, Tata Motors down by 1.05%, Hindustan Unilever down by 0.89%, Vedanta down by 0.75% and Britannia Industries down by 0.65% were the top losers.

All Asian markets were trading in red; Hang Seng decreased 14.53 points or 0.05% to 26,939.47, Jakarta Composite lost 13.43 points or 0.22% to 6,009.61, Nikkei 225 slipped 10.93 points or 0.05% to 23,426.84, Straits Times trembled 10.50 points or 0.33% to 3,205.03, Taiwan Weighted dropped 8.88 points or 0.08% to 11,638.58, Shanghai Composite declined 8.86 points or 0.31% to 2,894.33 and KOSPI was down by 5.31 points or 0.25% to 2,122.54.