Post Session: Quick Review

Indian equity benchmarks ended the lackluster day of trade flat on Friday, with frontline gauges swinging between red and green terrain throughout the session, despite strong trend seen in other Asian markets. Markets started off with marginal losses, as United Nations World Economic Situation and Prospects (WESP) 2020 report lowered its GDP growth estimate for India to 5.7 percent in the current fiscal (from 7.6 percent forecast in WESP 2019) and lowered its forecast for the next fiscal to 6.6 percent (from 7.4 percent earlier). However, key indices recovered soon and entered into positive territory, as sentiments turned optimistic with government think-tank NITI Aayog member Ramesh Chand’s statement that farm sector growth is likely to be higher at 3.1 per cent in the current fiscal compared with 2.9 per cent in 2018-19. Traders also took note of report that the government may increase customs duty on several products like paper, footwear, rubber items and toys in the forthcoming Budget with a view to promote Make in India and boost manufacturing growth.

Markets turned choppy and traded in a tight band in afternoon session as traders remained concerned ahead of key corporate results. The market participants overlooked a report that the Reserve Bank of India (RBI) decided to conduct simultaneous purchase and sale of government securities (G-Secs) under Open Market Operations (OMO) for Rs 10,000 crore each on January 23, 2020, in wake of the current liquidity and market situation and an assessment of the evolving financial conditions. Traders also failed to take any sense of relief with Minister of State for Finance and Corporate Affairs, Anurag Singh Thakur’s statement that the Centre is taking several measures to boost consumption in a bid to put the country’s economy on the growth path.

On the flip side, Asian markets ended higher on Friday, as China's economic growth matched expectations in spite of U.S. trade pressures. The world's second-largest economy grew 6.0% in the fourth quarter of 2019 from a year earlier, and 6.1% for the full year. European markets were trading in green after EU Trade Commissioner Phil Hogan struck a positive tone on talks with Washington, soothing some concerns over a possible escalation in trade tensions between the cross-Atlantic allies. Back home, power stocks were in focus with ICRA’s report that the government’s new scheme to grant over Rs 1.1 lakh crore to state power distribution companies (discoms) is a positive measure for the power sector, given the availability of grants for infrastructure upgradation and the chance to improve the operational efficiency of the discoms.

The BSE Sensex ended at 41943.38, up by 10.82 points or 0.03% after trading in a range of 41850.29 and 42063.93. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.54%, while Small cap index was up by 0.40%. (Provisional)

The top gaining sectoral indices on the BSE were Energy up by 1.71%, Telecom up by 1.65%, Healthcare up by 1.30%, Consumer Durables up by 0.73% and Power up by 0.64%, while PSU down by 0.75%, Bankex down by 0.74%, Metal down by 0.74%, Capital Goods down by 0.40% and IT down by 0.19% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 5.61%, Reliance Industries up by 2.70%, Sun Pharma up by 1.26%, Hero MotoCorp up by 0.72% and ONGC up by 0.72%. (Provisional)

On the flip side, Indusind Bank down by 2.57%, SBI down by 1.61%, HDFC down by 1.29%, Larsen & Toubro down by 1.29% and TCS down by 1.04% were the top losers. (Provisional)

Meanwhile, the United Nations (UN) in its World Economic Situation and Prospects (WESP) 2020 reprot has projected that India’s economy to grow by 5.7% in the current fiscal year (FY20) and expects it to rise to 6.6% in the next. The UN growth estimate for the current fiscal is drastically lower than the forecast of 7.6% made in last year’s report in January and 7% in the May update. The report said although there has been a steep decline in growth, India was still one of the high performers globally.

The report said it was expected to improve its growth rate in the coming year because of the steps being taken. According to the report, only China has a higher growth rate than India among the world’s large economies with a 6% forecast for the current calendar year. It presented a dire picture of the global economy last year when the world’s gross product growth rate dropped to 2.3%, the lowest in a decade.

In India, it said, the government has responded to those issues by announcing some stimulus steps, which we do expect to improve economic growth in 2020 going forward. However, fiscal stimulus in itself will not be enough. It mentioned two areas where India could do better: Labour and green energy. The labour markets are not performing optimally with high levels of informality (and) gender barriers that effectively limit the participation of women. In addition a high number of youth are neither working nor undergoing training. This is something the government will have address, to both improve long-term economic growth and to reach (the UN’s) sustainable development goals.

The CNX Nifty ended at 12353.05, down by 2.45 points or 0.02% after trading in a range of 12321.40 and 12385.45. There were 24 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Airtel up by 5.51%, Dr. Reddys Lab up by 3.46%, Reliance Industries up by 2.85%, Grasim Industries up by 1.43% and Sun Pharma up by 1.38%. (Provisional)

On the flip side, Bharti Infratel down by 10.29%, Indusind Bank down by 2.59%, Vedanta down by 1.85%, BPCL down by 1.82% and GAIL India down by 1.75% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 46.40 points or 0.61% to 7,656.21, France’s CAC rose 55.94 points or 0.93% to 6,094.97 and Germany’s DAX was up by 95.01 points or 0.71% to 13,524.44.

Asian markets ended up on Friday as investors cheered by Chinese data that suggested the world's second- largest economy was stabilizing. Chinese shares ended marginally higher after data showed that the world's second-largest economy grew 6.0 percent in the fourth quarter of 2019 from a year earlier. Chinese economy grew an annual 6.1 percent in 2019, the slowest in 29 years but still within the government's target of 6-6.5 percent. In response to the lower growth rate, Beijing is widely expected to introduce more stimulus measures in this year. Further, data showed growth in industrial production accelerated unexpectedly to 6.9 percent in December from 6.2 percent in November. The rate was expected to ease to 5.9 percent. Retail sales expanded 8 percent annually, as seen in November, and slightly faster than the expected rate of 7.9 percent. In the year-to-date period, fixed asset investment was up 5.4 percent versus the expected rate of 5.2 percent. Moreover, Japanese shares closed higher as a softer yen boosted exporters' shares.