Benchmarks trade slightly higher in early deals

Indian equity benchmarks are trading slightly higher, after a flat opening, in early deals on Tuesday. Start of session was quite cautious amid thin trade ahead of year-end holidays and the International Monetary Fund (IMF) called for 'urgent action' to reverse the economic slowdown of the Indian economy. It has retained India’s economic growth forecast at 6.1% for FY20, but said risks to the outlook are tilted to downward side. Afterwards markets took some encouragement with Industry chamber PHDCCI’s statement that the definition of micro, small and medium enterprises (MSMEs) on the basis of turnover will help in promoting the ease of doing business as the process of identification and dealings with such entities will become simpler and faster. Traders also took note of report that the Reserve Bank of India (RBI) conducted its first simultaneous 'buy and sell' open market operations (OMOs).

On the global front, Asian markets were trading mostly lower in Christmas Eve trading amid report that China has announced plans to lower tariffs on a range of products. Trading activity remained subdued ahead of the Christmas holidays. Besides, investors are looking ahead to the release of minutes of the Bank of Japan's monetary policy meeting held in October.

Back home, power stocks were in focus with report that the Power Ministry has scrapped the auction to procure 2,500 MW electricity for medium term (three years) under a scheme to provide relief to thermal power plants plagued by short coal supplies. In stock specific development, Reliance Industries edged down slightly after ONGC physically took over the PMT fields from Reliance Industries (RIL) and Shell. However, Jet Airways jumped on reports its lenders have sought fresh bids for the grounded airline.

The BSE Sensex is currently trading at 41673.84, up by 31.18 points or 0.07% after trading in a range of 41603.90 and 41702.98. There were 21 stocks advancing against 9 stocks declining on the index, while 1 stock remains unchanged on the index on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.15%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.60%, Auto up by 0.52%, Power up by 0.50%, Metal up by 0.47% and Consumer discretionary was up by 0.45%, while IT down by 0.33%, TECK down by 0.19% and Energy was down by 0.06% were the few losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.80%, Mahindra & Mahindra up by 1.16%, Titan Company up by 0.98%, Hero MotoCorp up by 0.95% and ONGC up by 0.72%. On the flip side, HCL Technologies down by 1.60%, HDFC Bank down by 0.67%, Tech Mahindra down by 0.44%, Infosys down by 0.38% and Axis Bank down by 0.24% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its latest report has said that India is now in the midst of a significant economic slowdown and urged the government to take urgent policy actions to address the current prolonged downturn. It also said that India’s rapid economic expansion in recent years has lifted millions of people out of poverty. However, in the first half of 2019, a combination of factors led to subdued economic growth in India. On the growth front, it said India’s gross domestic product (GDP) growth is projected at 6.1% for fiscal year 2019-20 (FY20), reflecting the primarily cyclical slowdown, which would be the lowest in 7 years, and is expected to rebound to 7.0% in FY21.

With risks to the outlook tilted to the downside, the IMF called for continued sound macroeconomic management. They saw an opportunity with the strong mandate of the new government to reinvigorate the reform agenda to boost inclusive and sustainable growth. The report pinned the slowing growth of the Indian economy on the deceleration of consumption and investment that was made worse by regulatory uncertainty. It said the relatively low food prices contributed to ‘rural distress’.

On a positive note, the IMF report said over the medium term, growth is projected to gradually rise to its medium-term potential of 7.3% helped by a firming in investment and private consumption in the second half of the fiscal year. This is expected to be supported by the lagged effects of monetary policy easing, recent measures to facilitate monetary policy transmission and address corporate and environmental regulatory uncertainty, and government programs to support rural consumption being rolled out.

The report said that the other contributing factors to an improvement would include continued commitment to inflation targeting, gradual macro-financial and structural reforms, including implementation of reforms initiated earlier, such as the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC), as well as ongoing steps to liberalise FDI (foreign direct investment) flows and further improve the ease of doing business.

The CNX Nifty is currently trading at 12278.10, up by 15.35 points or 0.13% after trading in a range of 12250.25 and 12283.70. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 2.31%, Yes Bank up by 1.61%, Indusind Bank up by 1.53%, Hero MotoCorp up by 1.11% and Mahindra & Mahindra up by 1.03%. On the flip side, HCL Technologies down by 1.36%, Wipro down by 0.53%, HDFC Bank down by 0.52%, Tech Mahindra down by 0.50% and Dr. Reddy’s Lab down by 0.35% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 42.20 points or 0.15% to 27,864.21, Taiwan Weighted dropped 14.27 points or 0.12% to 12,007.96, KOSPI fell 10.82 points or 0.49% to 2,192.89, Nikkei 225 slipped 6.75 points or 0.03% to 23,814.36. On the flip side, Shanghai Composite gained 7.44 points or 0.25% to 2,970.19 and Straits Times was up by 10.40 points or 0.32% to 3,224.40.