Benchmark indices continued trading higher in mid-afternoon session. At 14:22 IST, the barometer index, the S&P BSE Sensex, was up 66.41 points or 0.17% at 39,905.66. The Nifty 50 index was up 29.4 points or 0.25% at 11,946.75. The sentiment was boosted by the government pegging the growth rate for the current fiscal at 7%, marginally up from the five-year low of 6.8% recorded in the previous fiscal.
The S&P BSE Mid-Cap index was down 0.02%. The S&P BSE Small-Cap index was up 0.15%.
The market breadth, indicating the overall health of the market, was positive. On the BSE, 1251 shares rose and 1078 shares fell. A total of 168 shares were unchanged.
The Union Budget will be announced tomorrow, 5 July 2019. After presenting the interim budget in February 2019, the Modi government will present its full-year budget 2019-20. The government is likely to amend several policies and schemes for delivering growth to the biggest drivers of the economy, including farmers, middle class, and the corporate sector.
Overseas, most European stocks were trading higher while most Asian stocks closed higher on Thursday. Global shares were trading firm after weaker-than-expected US economic data gave investors cause to anticipate that the Federal Reserve will cut interest rates at its upcoming July meeting.
Meanwhile, White House economic advisor Larry Kudlow told reporters on Wednesday that face-to-face trade talks between the U.S. and China will continue in the coming week.
US stocks rose on Wednesday, with each of the major indexes closing at a record high, as expectations grew that the Federal Reserve would take a more dovish turn as a raft of data provided more evidence of a slowing economy.
Payroll firm Automatic Data Processing Inc. in collaboration with Moody's Analytics, estimated the US private sector added 102,000 new jobs in June, above the 41,000 jobs created in May. A report on new claims for unemployment benefits for the week ended June 29, however, showed those falling by 8,000 to 221,000.
Two measures of the US services sector reflected some weakness, with the Institute for Supply Management's nonmanufacturing index falling in June to 55.1%, from 56.9% in May, the lowest reading in about two years. Markit's services PMI edged higher to 51.5 in June from a 39-month low of 50.9 in May.
Back home, FMCG stocks witnessed buying. Britannia Industries (up 1.45%), Jyothy Laboratories (up 1%), Nestle India (up 0.98%), Procter & Gamble Hygiene & Health Care (up 0.88%), Colgate Palmolive (India) (up 0.85%), Marico (up 0.47%), GlaxoSmithkline Consumer Healthcare (up 0.28%), Godrej Consumer Products (up 0.28%), Bajaj Consumer Care (up 0.22%) and Hindustan Unilever (up 0.02%) gained. Dabur India (down 1.03%) and Tata Global Beverages (down 0.59%) edged lower.
Defense stocks were trading higher. Bharat Forge (up 2.78%), Dynamatic Technologies (up 2.17%), Premier Explosives (up 1.4%), BEML (up 1.01%), Reliance Naval and Engineering (up 0.97%), Bharat Electronics (up 0.31%) and Bharat Dynamics (up 0.18%) advanced.
The Economic survey reported that the allocation for defence budget, including civil estimates and pensions for 2018-19 is Rs 4,04,364.71 crore, which is 44,510.50 crore over Budget Estimate (BE) 2017-18.
Force Motors was up 1.13% to Rs 1415. The company announced that domestic sales of small commercial vehicles and light commercial vehicles was 1355 units for the month of June 2019. While, domestic sales Utility Vehicles (UV), Sports Utility Vehicles (SUV) and tractors was at 778 units. The export sales of Small Commercial Vehicles (S0043V) and Light Commercial Vehicles (LCV) stood at a total of 77 units. The announcement was made during market hours today, 4 July 2019.
Gravita India was down 0.17% to Rs 57.25. The company announced that Gravita Netherlands BY, a step down subsidiary of the company has sold its 100.00% stake in Met Mauritania Recycling SARL formerly known as Gravita Mauritania SARL (a wholly owned subsidiary of Gravita Netherlands BY). The stake has been sold to Mr. Ankit Gupta and Shubham Gupta Directors of Met World DMCC.
In the commodities market, Brent crude for September 2019 settlement fell 51 cents and traded at $63.31 a barrel. The contract rose $1.42 cents or, 2.27% to settle at $63.82 a barrel in the previous trading session.
MCX Gold futures for 5 August 2019 settlement fell 0.16% at Rs 34,191.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 68.785, compared with its close of 68.8975 during the previous trading session.
The yield on 10-year benchmark federal paper fell to 6.781% at 14:22 IST compared with 6.833% at close in the previous trading session
On the economic front, the Economic Survey 2018-19 tabled today revealed that to become a $5 trillion economy by 2025, India need to sustain a GDP growth rate of 8%. Chief Economic Advisor K V Subramanian expects FY20 GDP growth at 7%. This higher growth will come in the wake of the stable macros, he said. He sees the general fiscal deficit seen at 5.8% in FY19 vs 6.4% in FY18.
For the global economy, the year 2018 was difficult, with the world output growth falling from 3.8% in 2017 to 3.6% in 2018. Growth rate of world output is projected to fall further to 3.3% in 2019 as growth of both advanced economies and emerging & developing economies are expected to decline.
Growth of the Indian economy moderated in 2018-19 with a growth of 6.8%, slightly lower than 7.2% in 2017-18. Yet, India continued to be the fastest growing major economy in the world. India maintained its macroeconomic stability by containing inflation within 4% and by maintaining a manageable current account deficit to GDP ratio. The current account deficit to GDP was higher in 2018-19 as compared to 2017-18, primarily due to higher oil prices, which were about $14/bbl higher in 2018-19 vis-vis the previous year. However, the current account deficit started to narrow in the third quarter of the year.
The manufacturing sector was characterised by higher growth in 2018-19 while the growth in agriculture sector witnessed tapering. Growth in investment, which had slowed down for many years, has bottomed out and has started to recover since 2017-18. In fact, growth in fixed investment picked up from 8.3% in 2016-17 to 9.3% in 2017-18 and further to 10.0% in 2018-19. Net FDI inflows grew by 14.2% in 2018-19. The survey added that the investment rate would likely be higher in FY20.
Capital expenditure of Central Government grew by 15.1% in 2018-19 leading to increase in share of capital expenditure in total expenditure. Outlook of Indian economy appears bright with prospects of pickup in growth in 2019-20 on back of pickup in private investment and robust consumption growth.
Subramanian sees oil prices seen declining in FY20. According to the Economic Survey, the government stood by the path of fiscal consolidation in FY19. Non-performing assets (NPAs) as percentage of gross advances reduced to 10.1% at end December 2018 from 11.5% at end March 2018. The decline in NPAs should help push capex cycle from here, the survey said.
The survey also says that accommocative RBI policy should help cut real interest rates. The survey said rural wages growth started increasing since mid-2018. It also said that Indian farmers may have produced less in FY19 because of the fall in food prices. The share of share of informal sector in manufacturing has fallen since last year, the survey revealed.
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