Local equities continue bull run; Nifty zooms over 150 points

Frontline equity indices enticing some more traction have added some more points on the streets amid no further escalation in US-Iran tensions as US offered to embrace peace with the Iranian leadership in a bid to de-escalate tensions in the Middle East. On BSE, barring IT stocks all sub-indices were trading in green; Auto, Industrials and Telecom up as much as 1.50%. Sentiments remain positive with World Bank’s report that it has projected a 5% growth rate for India in the 2019-2020 fiscal, but said it was likely to recover to 5.8 per cent in the following financial year. Traders ignored former Union finance minister Yashwant Sinha’s report as he questioned estimation that the economy will grow at 5% in 2019-20, saying the figure is ‘imaginary’ and raised doubt about the Modi government’s capability of tackling economic issues. Market participants also overlooked a report that the government’s official GDP growth estimate at 5 per cent is optimistic, pegging the critical number to go down till 4.6 per cent for the fiscal. The estimates come a day after the government conceded that GDP growth will slip to 11-year low of 5 per cent in its advance estimates.

On the global front, all Asian markets are trading higher, as the United States and Iran backed away from the brink of further conflict in the Middle East and investors unwound safety plays. Back home, Industry body FICCI reported 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 per cent during 2019-20.

The BSE Sensex is currently trading at 41355.26, up by 537.52 points or 1.32% after trading in a range of 41175.72 and 41361.27. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.42%, while Small cap index was up by 1.48%.

The top gaining sectoral indices on the BSE were Auto up by 1.96%, Industrials up by 1.95%, Telecom up by 1.89%, BANKEX up by 1.85% and Energy was up by 1.82%, while IT down by 0.03% was the lone losing indices on BSE.

The top gainers on the Sensex were IndusInd Bank up by 2.69%, SBI up by 2.66%, ICICI Bank up by 2.56%, Mahindra & Mahindra up by 2.34% and Reliance Industries was up by 2.17%. On the flip side, TCS down by 1.62%, HCL Tech down by 0.39% and Tech Mahindra was down by 0.33% 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 is currently trading at 12183.20, up by 157.85 points or 1.31% after trading in a range of 12132.55 and 12186.65. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 4.51%, Tata Motors up by 3.53%, JSW Steel up by 3.50%, Zee Entertainment up by 3.12% and IndusInd Bank was up by 2.74%. On the flip side, TCS down by 1.61%, HCL Tech. down by 0.50%, Tech Mahindra down by 0.49%, Coal India down by 0.40% and Britannia was down by 0.03% were the top losers.

All Asian markets are trading higher, Nikkei 225 surged 512.72 points or 2.21% to 23,717.48, Hang Seng increased 319.46 points or 1.14% to 28,407.38, Taiwan Weighted strengthened 138.75 points or 1.17% to 11,955.85, KOSPI rose 25.18 points or 1.17% to 2,176.49, Shanghai Composite gained 14.47 points or 0.47% to 3,081.36, Jakarta Composite soared 14.05 points or 0.23% to 6,239.74 and Straits Times advanced 2.30 points or 0.07% to 3,248.19.