Indian markets maintain upward momentum

Indian equity markets maintained their upward momentum in the early noon session, following gains in metal, basic materials and IT stocks. Healthy buying was observed in blue-chip stocks like Tata Steel, Vedanta and Yes Bank. Apart from the blue chips, the broader markets too equally participated in the rally. Sentiments got boost with Commerce and Industry Minister Piyush Goyal’s statement that the country is well poised to attract investments that wish to move out of China. He said the tax reforms introduced by the government recently will ensure investments come back to India. Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das said that the central bank saw economic growth slowdown in February, prompting it to cut rates ahead of the curve and wondered why markets were surprised with the decision to pause rate reduction. Noting that there is a need for an informed and objective discussion on the country's economy, Das said the RBI would do whatever is necessary to address growth slowdown, spikes in inflation as well to ensure good health of banks and non-bank lenders.

On the global front, Asian markets were trading mostly in green, following firm cues from US stock indices overnight after the US and China finally reached an agreement on a phase one trade deal last week. Back on street, in scrip specific development, shares of Ashiana Housing gained on converting 322 EoIs into booking of ‘Ashiana Daksh’ project at Jaipur.

The BSE Sensex is currently trading at 41254.39, up by 315.67 points or 0.77% after trading in a range of 41005.18 and 41262.88. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.35%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Metal up by 3.00%, Basic Materials up by 1.56%, IT up by 1.31%, TECK up by 1.16% and FMCG was up by 0.92%, while Consumer Durables down by 0.37%, and Healthcare down by 0.09% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 4.50%, Vedanta up by 4.21%, Yes Bank up by 1.71%, Infosys up by 1.59% and TCS was up by 1.49%. On the flip side, Sun Pharma down by 0.68%, ONGC down by 0.56%, NTPC down by 0.44% and Bajaj Auto was down by 0.11% were the top losers.

Meanwhile, with India’s GDP growth slowing to over six-year low of 4.5 percent in July-September, IMF Chief Economist Gita Gopinath has said that the government should focus on structural reforms like clean-up of banks and labor reforms to address the slowdown in domestic demand. Given the cyclical position and the structural challenges of the Indian economy at this point, she recommend that policies focus on managing the slowdown in domestic demand, and on boosting productivity growth and supporting employment creation in the medium term. Recommending a series of key policy priorities for the government, she said, 'Politically, the time -- early in the government's second term -- is right for a structural reform push.'

Gopinath has stated that the policy priorities of the government should also include a credible fiscal consolidation path that is more ambitious than currently envisaged by the government. She also noted that this is needed to reduce the high level of debt and reduce crowding out which would free up financial resources for private investment. She added that this should be driven by subsidy-spending rationalization and tax-base enhancing measures.

In this regard, IMF Chief Economist advocated, among others, three policy priorities for the government. First is to accelerate the clean-up of the banks, other financial institution, and corporate balance sheets and enhance governance of public sector banks to revive bank credit and enhance the efficiency of credit provision, while monitoring closely emerging risks from the liquidity stress in non-banking financial companies (NBFCs) and enhancing supervision and regulation of the NBFCs.

The CNX Nifty is currently trading at 12140.15, up by 86.20 points or 0.72% after trading in a range of 12070.35 and 12142.15. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 4.60%, Vedanta up by 4.38%, JSW Steel up by 3.30%, Hindalco up by 2.49% and Zee Entertainment was up by 2.16%. On the flip side, GAIL India down by 1.90%, Sun Pharma down by 0.71%, UPL down by 0.63%, ONGC down by 0.60% and Titan Company was down by 0.39% were the top losers.

Asian markets were trading mostly in green, Taiwan Weighted strengthened 134.06 points or 1.12% to 12,073.83, Shanghai Composite gained 47.01 points or 1.58% to 3,031.40, Jakarta Composite soared 1.38 points or 0.02% to 6,212.97, Hang Seng increased 370.09 points or 1.35% to 27,878.18, KOSPI rose 25.28 points or 1.17% to 2,193.43 and Nikkei 225 was up by 107.25 points or 0.45% to 24,059.60. On the other hand, Straits Times was down by 3.28 points or 0.1% to 3,202.81.