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Published on 17/01/2020 4:57:54 PM | Source: LKP Securities Ltd

Bourses end volatile session on flat note - LKP Securities

Posted in Market Outlook| #Market Outlook #LKP Securities Ltd

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Bourses end volatile session on flat note

Indian equity bourses ended volatile session on flat note on Friday. The start of the day was on cautious note, 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). But soon, indices staged sharp gains, aided with 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.

Despite high volatility on the street, key benchmarks traded in green for the most part of the session, amid reports 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. Some relief also came with a private report stating that India attracted tech investments worth $9.36 billion last year, a 95 per cent increase compared with the previous year.

On the global front, European markets were trading in green, even though the euro area current account surplus declined in November from the previous month. The European Central Bank reported that the current account surplus fell to EUR 34 billion from EUR 36 billion in October. Asian markets ended in green, after the Bank of Korea left its key interest rates unchanged as sluggishness in the domestic economy eased somewhat. The Monetary Policy Board of the Bank of Korea decided to maintain the base rate at 1.25 percent. The bank had reduced the rate by 25 basis points each in July and October 2019.

Back home, power industry stocks ended higher, aided 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. But, banking stocks ended lower, despite Reserve Bank of India’s (RBI) latest data showing that banks credit rose by 7.57 percent to Rs 100.44 lakh crore, while deposits grew by 9.77 percent to Rs 132.10 lakh crore in the fortnight to January 2.

Finally, the BSE Sensex rose 12.81 points or 0.03% to 41,945.37, while the CNX Nifty was down by 3.15 points or 0.03% to 12,352.35.

The BSE Sensex touched high and low of 42,063.93 and 41,850.29, respectively and there were 18 stocks advancing against 12 stocks declining.

The broader indices ended in green; the BSE Mid cap index gained 0.54%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Energy up by 1.79%, Telecom up by 1.49%, Healthcare up by 1.26%, Consumer Durables up by 0.62% and Power up by 0.61%, while Bankex down by 0.78%, PSU down by 0.72%, Metal down by 0.71%, Capital Goods down by 0.37% and IT down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 5.47%, Reliance Industries up by 2.79%, Sun Pharma up by 1.24%, HCL Tech. up by 0.91% and Maruti Suzuki up by 0.80%. On the flip side, Indusind Bank down by 2.46%, SBI down by 1.62%, HDFC down by 1.23%, ICICI Bank down by 1.14% and Larsen & Toubro down by 1.10% were the top losers.

Meanwhile, in order to protect the domestic players and to discourage cheap imports, the Government of India is likely to impose anti-dumping duty on a chemical used in pharma and pesticide industries from China and Saudi Arabia, as a probe has been initiated into an alleged dumping of Dimethyl Formamide from these two countries.

The Directorate General of Trade Remedies (DGTR), which ensures a level playing field to the Domestic Industry against the adverse impact of the unfair trade practices, has initiated an investigation following a complaint filed by Balaji Amines on behalf of domestic industry. On the basis of the prima facie evidence submitted by the company about dumping of the product by firms in these two nations, DGTR initiated an investigation.

In the probe, DGTR will determine the existence, degree and effect of any alleged dumping. If it will be established that the dumping has impacted the domestic industry, the directorate would recommend imposition of the duty. The finance ministry will take the final decision to impose the duty. The period of investigation is January to September 2019 (9 months). It would also look at the data of 2016-19.

The CNX Nifty traded in a range of 12,385.45 and 12,321.40. There were 21 stocks advancing against 28 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Bharti Airtel up by 5.47%, Dr. Reddy’s Lab up by 3.04%, Reliance Industries up by 2.80%, Grasim Industries up by 1.57% and Sun Pharma up by 1.27%. On the flip side, Bharti Infratel down by 11.13%, Indusind Bank down by 2.59%, GAIL India down by 2.14%, Vedanta down by 1.79% and BPCL down by 1.73% were the top losers.

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.

 

 

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