Local equities continue lethargic trend; Sensex below 40,400 mark

Tracking weak global cues, local equity benchmarks continue to show a lethargic trend in morning session, with losses of around quarter a percent. Traders remain concerned with Minister of State for Finance Anurag Singh Thakur’s statement that Central GST collection fell short of the budged estimate by nearly 40% during the April-November period of 2019-20. The actual CGST collection during April-November stood at Rs 3,28,365 crore while the budgeted estimate is of Rs 5,26,000 crore for these months. However, downside further remain capped with Chief Economic Adviser KV Subramanian’s statement private investment is key to economic growth and the recent cut in corporate tax rate was done to boost investments. Some comfort came with Indian Ambassador to the US, Harsh Vardhan Shringla’s statement that India took only five years to move from a $2 trillion to $3 trillion economy, the Indian envoy to the US has said as he exuded confidence that the country would touch the $5 trillion mark in the coming years. Besides, the government reported that more than Rs 10 lakh crore have been disbursed under the Pradhan Mantri Mudra Yojana till November 1, 2019. The PMMY is a scheme launched by the prime minister on April 8, 2015, for providing loans up to Rs 10 lakh to non-corporate, non-farm small/micro enterprises.

On the global front, Asian markets were trading mostly in red, after official statistics indicated China's consumer inflation rose by the quickest pace in nearly eight years. China's consumer price index surged 4.5% in November, the quickest growth rate since January 2012 and faster than market expectations. Back on the domestic turf, power sector stocks were in focus as global rating agency Moody’s has reported it expects an overall supportive business environment for the power sector in India and has maintained a stable outlook for the industry. The agency noted that the tariff reforms allowing timely recovery of costs are seen to be incentivising private investment in the sector.

The BSE Sensex is currently trading at 40385.80, down by 101.63 points or 0.25% after trading in a range of 40383.10 and 40588.81. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.40%, while Small cap index was down by 0.17%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.24%, Healthcare was up by 0.03%, while IT down by 0.81%, Realty down by 0.79%, TECK down by 0.77%, Energy down by 0.65% and Capital Goods was down by 0.45% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.35%, ONGC up by 1.07%, Sun Pharma up by 0.89%, HDFC Bank up by 0.47% and Bharti Airtel was up by 0.28%. On the flip side, Yes Bank down by 2.58%, TCS down by 1.92%, Tata Motors - DVR down by 1.65%, IndusInd Bank down by 1.62% and Axis Bank was down by 1.43% were the top losers.

Meanwhile, amid slowdown in economy, Chief Economic Advisor (CEA) Krishnamurthy Subramanian has said the government has a well-thought-out agenda for reforms to beat current slowdown in the economy which is more cyclical than structural in nature. He mentioned ‘needless to say that there is a slowdown. But you estimate whether it is cyclical or structural by estimating the potential growth rate of the economy. If the growth potential has changed because of some structural aspects of the economy, then you can say that the slowdown is structural.’

Subramanian asserted private investment is key to economic growth and the recent cut in corporate tax rate was done to boost investments. In September 2019, the government had announced a cut in the corporate tax rate to 22% from 30%. It also lowered the tax rate for new manufacturing companies to 15% to attract new foreign direct investments. He added that investment is required for a sustained economic growth.

India's Gross Domestic Product (GDP) growth slowed sharply to a pace of 4.5% in the second quarter of current financial year (Q2FY20) hit by a slump in manufacturing output. The pace of GDP growth has moderated from the 5% rate in April-June and 7% in July-September quarter of 2018.

The CNX Nifty is currently trading at 11909.85, down by 27.65 points or 0.23% after trading in a range of 11904.60 and 11953.20. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Grasim Industries up by 1.53%, Cipla up by 1.37%, Hindustan Unilever up by 1.32%, UPL up by 1.23% and ONGC was up by 0.99%. On the flip side, Zee Entertainment down by 2.99%, Bharti Infratel down by 1.98%, GAIL India down by 1.89%, TCS down by 1.89% and Yes Bank was down by 1.78% were the top losers.

Asian markets were trading mostly in red, Taiwan Weighted dropped 49.40 points or 0.42% to 11,611.37, Nikkei 225 slipped 13.25 points or 0.06% to 23,417.45, Hang Seng decreased 12.49 points or 0.05% to 26,482.24, Jakarta Composite lost 7.84 points or 0.13% to 6,185.95 and Shanghai Composite was down by 5.89 points or 0.2% to 2,908.59.

On the other hand, Straits Times advanced 1.66 points or 0.05% to 3,181.48 and KOSPI was up by 7.62 points or 0.36% to 2,096.27.