Post Session: Quick Review

Indian equity benchmarks traded jubilantly throughout the day to end Tuesday’s session at fresh record closing high levels, following gains in Asian peers. Key gauges traded on positive note since the beginning, as sentiments remained up-beat with Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement 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. Traders also reacted positively to report that after a delay of over two months, the Centre has released Rs. 35,298 crore as GST compensation to the states for the August-September period.

Key indices continued their rally mood to reach at fresh intraday high points in last leg of trade, taking support from 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. The momentum in the markets was also buoyed as Union Minister Nitin Gadkari approved changes in the Interest Subvention Scheme guidelines for micro, small and medium enterprises, and said the modifications are expected to boost their productivity through access to credit at reduced cost.

On the global front, Asian markets ended mostly higher on Tuesday as trade deal optimism and Wall Street's streak to all-time highs supported sentiment. European markets were trading mostly in red amid reports that Britain's prime minister was ready to play rough in Brexit talks. Back home, reality stocks were in focus as rating agency ICRA maintained a negative outlook for housing because of subdued demand, slow sales, over-supply and liquidity crunch.

The BSE Sensex ended at 41384.88, up by 446.16 points or 1.09% after trading in a range of 41005.18 and 41390.66. There were 22 stocks advancing against 8 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.39%, while Small cap index was up by 0.60%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 3.28%, Metal up by 3.02%, TECK up by 2.00%, IT up by 1.84% and Basic Materials up by 1.80%, while Consumer Durables down by 0.66%, Realty down by 0.22% and Healthcare down by 0.20% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 4.37%, Bharti Airtel up by 4.31%, Tata Motors - DVR up by 3.99%, Vedanta up by 3.50% and Tata Motors up by 3.09%. (Provisional)

On the flip side, Sun Pharma down by 1.43%, Bajaj Auto down by 0.61%, Mahindra & Mahindra down by 0.60%, Hindustan Unilever down by 0.33% and Hero MotoCorp down by 0.24% were the top losers. (Provisional)

Meanwhile, expressing concern over India’s economic growth, Moody's Investors Service has lowered Gross Domestic Product (GDP) growth projection for the country to 4.9% from 5.8% for the fiscal year 2019-20 (FY20). It said that the nation’s weak household consumption will curb economic growth and weigh on the credit quality of Indian issuers in a range of sectors. It added that the major factors responsible for weakening economic growth were rural financial stress, low job creation and liquidity constraints.

As per the report what was once an investment-led slowdown has now broadened into weakening consumption, driven by financial stress among rural households on the back of stagnating agricultural wage growth and constrained productivity, as well as weak job creation due to rigid land and labour laws. Household consumption has been the backbone of India's growth, making up about 57% of GDP in FY19. Like other major markets, India's growth has decelerated, with GDP growth falling to 4.5% in Q3 2019 from 5.0% in Q2 2019. The report further noted that the credit crunch among non-bank financial institutions (NBFIs), the major providers of retail loans in recent years, has ‘exacerbated’ this slowdown.

Moody's expects that government measures to stimulate domestic demand - including income support for farmers and low-income households, monetary policy easing and a broad corporate tax cut - will be limited in offsetting this slowdown. Although a modest recovery is expected for next year, supported partly by spillovers from policy stimulus, economic growth will be weaker than in recent years, which will have negative credit implications for Indian issuers in a range of sectors. In automotive, weak demand and tight liquidity will constrain automakers' earnings. Moreover, slower economic growth over the last few quarters will also reduce debt servicing capabilities of households, which in turn will weaken the asset quality of retail loans across all segments.

The CNX Nifty ended at 12174.40, up by 120.45 points or 1.00% after trading in a range of 12070.35 and 12182.75. There were 39 stocks advancing against 11 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 4.64%, Bharti Airtel up by 4.36%, Vedanta up by 3.36%, Hindalco up by 3.31% and Tata Motors up by 2.97%. (Provisional)

On the flip side, Sun Pharma down by 1.25%, GAIL India down by 0.87%, Bajaj Auto down by 0.66%, Mahindra & Mahindra down by 0.60% and Titan Co down by 0.53% were the top losers. (Provisional)

European markets were trading mostly in red; France’s CAC decreased 19.00 points or 0.32% to 5,972.66 and Germany’s DAX decreased 73.13 points or 0.55% to 13,334.53, while UK’s FTSE 100 increased 2.18 points or 0.03% to 7,521.23.

Asian markets ended mostly higher on Tuesday after a top White House economic adviser, Larry Kudlow said the phase 1 trade deal between Washington and Beijing has been absolutely completed, adding that US exports to China will double under the agreement. Washington will also reduce some tariffs on Chinese imports in exchange for an about $200 billion increase in Chinese purchases of agricultural, manufactured, and energy products over the next two years. Chinese industrial production and retail sales came better than expected also boosted market sentiment. Japanese shares hit over one-year high, tracking Wall Street's run to a record closing high on renewed optimism over the Sino-US phase 1 trade deal.