Post Session: Quick Review

Indian equity benchmarks ended the lackluster trade on a flat note with negative bias on Monday, as investors have become cautious ahead of the Christmas festival. After making slightly negative start, key indices turned choppy, as traders remained cautious with Assocham president Niranjan Hiranandani’s statement that the economy is facing a liquidity problem and demand recession, and it requires measures to lift consumption, including reduction in goods and services tax and personal income tax and improved credit flow, to revive. Some anxiety also came with International Monetary Fund (IMF) chief economist Gita Gopinath’s statement that while it was anticipated that India’s growth will slow down, the current numbers come as a shocker with a sharp decline in both investment and consumption.

Local barometer gauges added losses in late afternoon session, as sentiments on the street weakened further with a report that after taking a big hit from the falling rate of economic growth in 2019, the job market may remain muted in the New Year as well in terms of workforce expansion and salary hikes as more and more companies are expected to prefer up-skilling of existing staff rather than hiring new ones. But, the markets managed to trim most of their initial losses, as traders found some solace with report that India's forex reserves continued on the northward trajectory, rising to a new record of $454.492 billion on the back of a $1.07 billion accretion for the week ended December 13.

On the global front, European markets were trading mostly in green as investors locked in some of the recent gains in thin trading ahead of the Christmas and Boxing Day holidays later in the week. Back home, steel sector were in focus with World Steel Association (worldsteel) in its latest report showing that  India's crude steel output fell for the second straight month in November, declining 2.8 percent to 8.934 million tonne (MT). During November 2018, the country's crude steel output stood at 9.192 MT.

The BSE Sensex ended at 41668.21, down by 13.33 points or 0.03% after trading in a range of 41474.61 and 41701.62. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.07%, while Small cap index was down by 0.06%. (Provisional)

The top gaining sectoral indices on the BSE were Auto up by 0.59%, TECK up by 0.45%, Consumer Disc up by 0.44%, IT up by 0.36% and Telecom up by 0.35%, while Energy down by 1.29%, PSU down by 0.61%, Realty down by 0.54%, FMCG down by 0.50% and Power down by 0.21% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Maruti Suzuki up by 1.63%, Hero MotoCorp up by 1.21%, HDFC up by 1.13%, Axis Bank up by 0.68% and Asian Paints up by 0.66%. (Provisional)

On the flip side, Nestle down by 2.28%, Reliance Industries down by 1.74%, SBI down by 1.57%, Mahindra & Mahindra down by 1.10% and Tech Mahindra down by 1.01% were the top losers. (Provisional)

Meanwhile, expressing cautiousness over India’s fiscal condition, the International Monetary Fund’s (IMF) Chief Economist Gita Gopinath has said the country needs to keep its fiscal deficit target, which would require expenditure rationalisation and increased revenue mobilisation. She said that in the past few quarters, there has been a steep slowdown in private sector demand and there is now weakness in investment. She highlighted that if there is a prolonged weakness in investment, it will affect potential growth.

For India, she said macro stability is very important, which means stability on the fiscal front. A clear sense of keeping to the target of fiscal consolidation is very important. That would require increasing revenue mobilisation and also rationalising expenditure. She further said that ‘when we talk about fiscal consolidation, we think of it as a medium-term target which is something that has to be addressed over a period of time and not necessarily overnight’.

Gopinath also said India’s consolidated deficit (the Centre and states combined) is the highest among the G20 nations. She added that ‘so, it’s not a free lunch and this has be very carefully managed’ and it is also important for India to undertake reforms. But, to be able to do this, some clarity, greater clarity and greater certainty would help, she said adding that this is also applied to big reforms like the goods and services tax (GST). On increasing share of the manufacturing sector, she said another set of big reforms are required to get manufacturing on the ground and for India to have bigger presence on the export front.

The CNX Nifty ended at 12266.35, down by 5.45 points or 0.04% after trading in a range of 12213.25 and 12287.15. There were 29 stocks advancing against 20 stocks declining on the index. (Provisional)

The top gainers on Nifty were Zee Entertainment up by 3.64%, Vedanta up by 2.43%, Maruti Suzuki up by 1.56%, Dr. Reddys Lab up by 1.45% and HDFC up by 1.16%. (Provisional)

On the flip side, Yes Bank down by 3.70%, Nestle down by 2.41%, Reliance Industries down by 1.82%, SBI down by 1.61% and Coal India down by 1.57% were the top losers. (Provisional)

European markets were trading mostly in green; UK’s FTSE 100 increased 10.49 points or 0.14% to 7,592.97 and France’s CAC rose 0.04 points or 0% to 6,021.57, while Germany’s DAX decreased 20.85 points or 0.16% to 13,298.05.

Asian markets ended mostly higher on Monday due to greater optimism for US-China trade relations and the release of US data pointing to solid economic growth in the world's largest economy. China said on Monday it would lower import tariffs on over 850 products from January 1, including frozen pork, as well as some information technology products starting July 1. Trade optimism overall boosted sentiment as US President Donald Trump tweeted Friday that he had ‘a very good talk’ with President Xi Jinping of China on trade and that Beijing has already started large scale purchases of agricultural products and more. Japanese shares ended marginally higher as the early approval of a cancer drug and an improved earnings outlook boosted the healthcare sector in thin trade ahead of the Christmas and New Year holidays.