Key equity benchmarks ended a volatile session with small gains ahead of the Union Budget tomorrow. The Nifty traded above 11950 for most part of the session, but ended slightly below that level. The barometer index, the S&P BSE Sensex, rose 68.81 points or 0.17% to 39,908.06, as per the provisional closing data. The Nifty 50 index rose 30 points or 0.25% to 11,946.75, as per the provisional closing data.
The sentiment was boosted by India's economic survey 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.
Positive global shares also supported gains. Global stocks edged higher 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.
In the broader market, the S&P BSE Mid-Cap index was down 0.19%. The S&P BSE Small-Cap index was up 0.12%.
The market breadth, indicating the overall health of the market, was positive. On the BSE, 1244 shares rose and 1199 shares fell. A total of 176 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.
Index pivotals, Reliance Industries (up 0.47%), Hindustan Unilever (up 0.29%) and Tata Consultancy Services (up 0.28%) gained.
Shares of Indiabulls Finance (up 1.35%) climbed as much as 4% and was on track for their fourth straight day of gains
UPL (up 7.78%), Bharti Airtel (up 2.75%) and UltraTech Cement (up 2.12%) advanced.
Yes Bank (down 3.91%), Titan Company (down 2.76%) and Bharti Infratel (down 1.15%) declined.
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.
Defense stocks edged higher. Bharat Forge (up 2.89%), Dynamatic Technologies (up 2.17%), BEML (up 0.76%) and Bharat Electronics (up 0.44%) advanced.
Auto stocks witnessed buying. Hero MotoCorp (up 0.84%), Eicher Motors (up 0.77%), Maruti Suzuki India (up 0.18%) and Mahindra & Mahindra (up 0.16%) gained. TVS Motor Company (down 0.74%), Ashok Leyland (down 0.39%), Escorts (down 0.25%) and Bajaj Auto (down 0.09%) declined.
The government has given an impetus to the promotion of quality public transport, especially through the introduction of metro projects in various major cities, a shift to electric mobility in road transport can lead to beneficial results. India could also emerge as a hub for manufacturing of such vehicles. With this view, a National Electric Mobility Mission Plan 2020 (NEMMP) was conceived with an objective to achieve sales of 60-70 lakh units of total EVs by 2020.
As electric vehicles represent the next generation in sustainable mobility, India must emphasize on them. Currently, the market share of electric cars is only 0.06% when compared to 2% in China and 39% in Norway. Access to fast charging facilities must be fostered to increase the market share of electric vehicles, the economic survey said.
Tata Motors was up 1.82% to Rs 165.3. The total Jaguar Land Rover Automotive (JLR) UK sales were up 5% at 9,433 units against 8,984 units. Total Jaguar UK sales were down 0.7% at 2,938 units against 2,960 units and total Land Rover UK sales were up 7.8% at 6,495 units versus 6,024 units, YoY.
Kolte-Patil Developers was up 6.53% to Rs 234.15 after the company announced the signing of three new projects in Pune under the Development Management (DM) model. The projects are located at Wagholi in East Pune and Kiwale and Ravet in West Pune with a saleable potential of 1.2 million square feet and over 1,250 units to be developed.
Metal stocks witnessed selling pressure. Jindal Steel & Power (down 1.94%), NMDC (down 1.94%), Vedanta (down 1.1%), Hindalco Industries (down 1.05%), Hindustan Zinc (down 0.75%), Hindustan Copper (down 0.74%), Tata Steel (down 0.6%) and National Aluminium Company (down 0.1%) declined. Steel Authority of India (up 0.1%) was marginally up
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. Capital expenditure of Central Government grew by 15.1% in 2018-19 leading to increase in share of capital expenditure in total expenditure. Given the macroeconomic situation and the structural reforms being undertaken by the government, the economy is projected to grow at 7% in 2019-20.
Investment rate seems to have bottomed out and the green shoots in investment activity seem to be taking hold, the survey said. It added that the investment rate would likely be higher in FY20. 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 accommodative 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.
Overseas, most European markets were trading marginally higher while most Asian stocks closed higher on Thursday. Global shares traded higher 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.
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