Post Session: Quick Review

Indian equity benchmarks ended volatile day of trade with minor gains on Thursday, on the back of buying by participants following mostly positive trade in Asian equities. Key indices made optimistic start and soon gathered pace to hit fresh lifetime highs, taking support from NITI Aayog vice chairman Rajiv Kumar’s statement that the government is likely to take more measures to deal with the problem of financial sector. However, key indices pared early gains to trade flat with some negative bias in early afternoon deals as traders turned cautious with data showing that India's merchandise exports fell for the fifth straight month. The commerce and industry ministry data showed that exports contracted by 1.8% in December 2019 to $27.36 billion, as processed petroleum exports saw lower receipts and broad-based decline continued to plague all major foreign exchange earning sectors. Imports too declined by 8.83% $38.61 billion, bringing down the trade deficit to $11.25 billion during the month under review. Sentiments remained dampened with Former finance secretary Subhash Garg’s statement that India's real fiscal deficit in FY20 is likely to be higher at 4.5-5% of GDP due to an expected shortfall in revenue, and higher spending. Investors also remained cautious ahead of important December quarter earnings.

Though, markets once again entered into green terrain and managed to keep their heads above water in dying hour of trade, as the Reserve Bank of India (RBI) introduced new rules, in a bid to improve user convenience and increase the security of card transactions. The RBI asked the issuers to provide a facility to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions - domestic and international, at PoS / ATMs / online transactions / contactless transactions, etc. Some support also came with a report that the MSME Export Promotion Council (MSNE-EPC) is holding the first three-day summit for aspiring entrepreneurs in the North East from Friday to pave the way for development of entrepreneurship and businesses by women and youths of the region.

On the global front, Asian markets ended mostly higher on Thursday, supported by hopes the U.S.-China trade deal could herald warmer relations between the world's two biggest economies and help to revive global growth. European markets were trading mostly in red. Back home, Infrastructure stocks were in focus with report that the allocation for the highway sector is likely to be raised by Rs 8,000-10,000 crore in the upcoming Budget. Besides, sugar stocks were in focus with a private report that the improvement in average sugar prices by close to Rs 2/kg to Rs 32.5-33.0/kg in 9M FY2020 y-o-y, along with the non-increase in the cane price for sugar season, SY2020 is expected to support the profitability of the sugar mills in the near term.

The BSE Sensex ended at 41926.41, up by 53.68 points or 0.13% after trading in a range of 41812.28 and 42059.45. There were 12 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.78%, while Small cap index was up by 0.78%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 0.83%, Healthcare up by 0.68%, Consumer Durables up by 0.67%, Consumer Discretionary Goods & Services up by 0.64% and Telecom up by 0.43%, while Metal down by 1.45%, PSU down by 0.61%, Oil & Gas down by 0.54%, Basic Materials down by 0.47% and Utilities down by 0.04% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Nestle up by 3.00%, Kotak Mahindra Bank up by 1.52%, Hindustan Unilever up by 1.25%, Bharti Airtel up by 1.18% and Power Grid up by 0.87%. (Provisional)

On the flip side, NTPC down by 1.90%, Hero MotoCorp down by 1.70%, Tata Steel down by 1.50%, Tech Mahindra down by 1.37% and Axis Bank down by 1.31% were the top losers. (Provisional)

Meanwhile, expressing concern over fiscal condition of India, former finance secretary Subhash Chandra Garg has said the country’s real fiscal deficit may be higher at 4.5-5% of Gross Domestic Product (GDP) in fiscal year 2019-20 (FY20). Spike in deficit is likely due to an expected shortfall in revenue, and higher spending. Besides, the government had pegged India’s FY20 deficit in the budget presented in July at 3.3% of GDP.

Garg said that a large portion of the deficit is being used to finance consumption expenditure, which is typically not a healthy practice. Factoring in off-budget expenditures including for bank recapitalisation, food subsidies, irrigation schemes and sanitation schemes, he estimated actual fiscal deficit of the Centre at 4.39% in FY18 (reported 3.5%) and 4.66% in FY19 (3.4%). He estimates the deficit at 4.5-5% in FY20 - budget estimate 3.3 per cent, which is likely to be revised to at least 3.5 per cent.

Former finance secretary sees a shortfall of Rs 2-2.5 lakh crore on revenue side in FY20 and off-budget financing at Rs 1.75-2.25 lakh crore. He said small savings schemes should be discontinued since they disrupted monetary policy transmission. He also criticised policies relating to fiscal deficit and debt management, saying less than 25% of the Centre’s annual borrowings is utilised for real capex as consumption expenditure is taking precedence.

The CNX Nifty ended at 12354.05, up by 10.75 points or 0.09% after trading in a range of 12315.80 and 12389.05. There were 20 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Eicher Motors up by 4.29%, Nestle up by 3.42%, Zee Entertainment up by 2.79%, Kotak Mahindra Bank up by 1.64% and Bharti Airtel up by 1.29%. (Provisional)

On the flip side, NTPC down by 2.30%, Bharti Infratel down by 2.06%, JSW Steel down by 2.04%, GAIL India down by 2.01% and Hindalco down by 1.90% were the top losers. (Provisional)

European markets were trading mostly in red; UK’s FTSE 100 decreased 23.63 points or 0.31% to 7,619.17 and Germany’s DAX fell 12.09 points or 0.09% to 13,420.21, while France’s CAC increased 2.64 points or 0.04% to 6,035.25.

Asian markets ended mostly higher on Thursday, although Chinese shares slipped and the yuan held steady as investors remained cautious about existing tariffs and unresolved issues after the United States and China signed a phase 1 trade deal. The deal reportedly includes Chinese purchase $200 billion worth of US goods and services over the next two years, including up to $50 billion worth of agricultural products. The deal also purportedly addresses issues such as intellectual property theft, forced technology transfers and currency manipulation by China. In exchange, the US will scrap a new round of tariffs and cut tariffs on approximately $120 billion worth of Chinese goods in half to 7.5%. Trump noted a 25% tariff on $250 billion worth of Chinese imports will remain in place in order to give the US leverage as the two countries enter into phase 2 negotiations. Japanese shares closed up after the release of upbeat core machinery orders data. Core machine orders in Japan jumped a seasonally adjusted 18% sequentially in November, the Cabinet Office said on Thursday coming in at 942.7 billion yen, following the 6.0% slide in October. On a yearly basis, core machine orders climbed 5.3 percent, following the 6.1 percent fall in the previous month.