Sensex, Nifty back in strong rally mood on Thursday

Indian equity markets came back in strong rally mood on Thursday, with Sensex & Nifty ending higher by around 1.55% each. The start of the day was on strong note, aided with industry body FICCI’s statement that the government should infuse capital in the economy without worrying about the fiscal deficit target as the GDP growth is estimated to slip to 11-year low of 5% during 2019-20. Adding some relief, SBI Chairman Rajnish Kumar said that banking sector is going to see good recoveries from non-performing assets in the third & fourth quarters of current fiscal, helped by resolution of some large stressed accounts.

Key bourses maintained their gaining momentum in the second half of the trading session, on the back of firm cues from the global markets. Investors were seen taking a note of credit rating agency, India Ratings and Research’s (Ind-Ra) report that India will have to raise its labour productivity growth to 6.3 per cent to achieve 8 per cent GDP growth. The labour productivity growth in FY19 was 5.2 per cent. The street paid no heed towards the World Bank’s latest report stating that growth in India is projected to decelerate to 5% in financial year (FY) 2019/20, which ends March 31, amid enduring financial sector issues.

On the global front, European markets were trading in green, as German industrial production rebounded in November. The data from Destatis revealed that industrial production grew 1.1 percent on a monthly basis, offsetting a 1 percent fall in October. Asian markets ended higher, after China's consumer prices increased at a steady pace in December. The National Bureau of Statistics reported that consumer prices advanced 4.5 percent year-on-year in December, the same rate as seen in November. On a monthly basis, consumer prices remained flat after rising 0.4 percent in November.

Back home, coal industry stocks remained in focus, after the CII said that the government’s move to further open coal mining sector and allowing non-coal companies to participate in auctions without end-use restrictions, will help boost both production and mining efficiency besides substituting import of coal worth about Rs 30,000 crore. Besides, textile industry stocks remained in watch, as Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said free trade agreements (FTAs) with Australia, Canada, and the European Union will help boost the country's textile exports.

Finally, the BSE Sensex gained 634.61 points or 1.55% to 41,452.35, while the CNX Nifty was up by 190.55 points or 1.58% to 12,215.90.

The BSE Sensex touched high and low of 41,482.12 and 41,175.72, respectively and there were 26 stocks advancing against 04 stocks declining.

The broader indices ended in green; the BSE Mid cap index rose 1.51%, while Small cap index was up by 1.55%.

The top gaining sectoral indices on the BSE were Realty up by 2.83%, Auto up by 2.64%, Bankex up by 2.29%, Industrials up by 2.24% and Consumer Disc up by 2.15%, while IT down by 0.11% was the lone losing index on BSE.

The top gainers on the Sensex were ICICI Bank up by 3.80%, SBI up by 3.25%, Mahindra & Mahindra up by 3.14%, Indusind Bank up by 3.00% and Maruti Suzuki up by 2.76%. On the flip side, TCS down by 1.73%, HCL Tech. down by 0.95%, NTPC down by 0.25% and Sun Pharma down by 0.07% were the few losers.

Meanwhile, State Bank of India (SBI) in its latest research report ‘Ecowrap’ has lowered its Gross domestic product (GDP) growth forecast for FY20 to 4.6% based on current available trends from the earlier 5%. The report even predicted growth rate to remain below 6% for the two years in a row. It mentioned that the FY20 GDP estimate as released by the Central Statistics Office (CSO) pegs the GDP growth rate at 5%, a 11-year-low. Nominal GDP growth at 7.5% is a 42-year-low. For FY20, the budgeted nominal GDP growth rate was 12% which has now been revised downwards to 7.5%. Based on this GDP revision, the impact on fiscal deficit is around 12 basis points for FY20.

It clarified this estimate has a shelf-life of two months and is only used as an input for budget calculations. It said that the CSO will release the first revised estimate of FY17, FY18 and FY19 on January 31 and based on that, GDP and GVA for FY20 would be revised further downwards in second advance estimate for FY20 on February 28 and on May 29.

It added that agriculture and allied activities are likely to grow at 2.8% in FY20, against the previous year growth of 2.9%. Moreover, it highlighted that factors like government expenditure are the key factors in determining the overall growth outlook for FY20 as variations in government spending have a spill over effect on other sectors. In Q2, government spending alone accounted for 40% of the entire quarter's growth (1.9% out of 4.5% headline GDP growth), even as its share in GDP was lower than 13%.

The CNX Nifty traded in a range of 12,224.05 and 12,132.55. There were 43 stocks advancing against 07 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 5.90%, Bharti Infratel up by 5.44%, Tata Motors up by 5.40%, ICICI Bank up by 3.74% and Indusind Bank up by 3.37%. On the flip side, TCS down by 1.56%, Coal India down by 1.12%, HCL Tech. down by 0.82%, Britannia down by 0.62% and GAIL down by 0.36% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 49.43 points or 0.65% to 7,624.36, France’s CAC rose 23.15 points or 0.38% to 6,054.15 and Germany’s DAX was up by 154.80 points or 1.16% to 13,474.98.

Asian markets ended higher on Thursday amid easing concerns surrounding the Middle East conflict. US President Donald Trump said there were no casualties from Iran's Wednesday attack on US forces in Iraq, and indicated the US would hit Iran with new sanctions, but not respond militarily. Japanese shares ended up as the safe-haven yen retreated on easing Middle East worries. Further, Chinese shares ended higher as investors drew optimism from data showing China's consumer prices increased at a steady pace in December, the National Bureau of Statistics said in a report. Consumer prices advanced 4.5 percent year-on-year in December, the same rate as seen in November. Inflation was forecast to rise to 4.7 percent. On the other hand, producer prices fell 0.5 percent annually after easing 1.4 percent a month ago. That marked the sixth month of contraction as manufacturers struggled with weak demand amid the trade war.