Market Update:
Benchmark indices extended gains in early trade with the Sensex rising 205.27 points to 39,919.47.
The Nifty50 jumped 49.50 points to 11,972.30, driven by HDFC and HDFC Bank.
Market Outlook
Arvind Sanger is the founder and managing partner of Geosphere Capital Management told CNBC-TV18 that GDP numbers for Q1FY20 should be worse than Q4FY19 and economy continued to decelerate.
Trade war & preference to tariffs have raised risks significantly, he said.
He feels the RBI cutting the rates not a solution to weak economy. "RBI rate cut might trigger sell on rally action."
Sanger said he is not willing to bet on overall market, will buy into specific sectors.
Market Opening:
Benchmark indices opened marginally higher with Nifty reclaiming 11,950 levels despite correction in global markets.
HPCL, BPCL, IOC, Hero Motocorp, Bharti Infratel, HDFC, GAIL and Wipro gained.
Tata Motors, Yes Bank, Eicher Motors, M&M, Hindalco and Maruti are under pressure.
Indian markets are expected to open positive on the back of a sharp decline in global crude oil prices. Also, markets are expected to react to GDP data and would watch developments on the global trade war situation, ICICI Direct said.
US markets ended in the negative territory after US President Donald Trump announced new tariffs on all goods coming from Mexico to curb illegal immigration across the border to the US.
Rupee Opening:
The Indian rupee has opened at 69.50 a dollar on June 3, higher by 17 paise compared to Friday's close of 69.67 a dollar.
Market Pre-Opening
Benchmark indices were higher in pre-opening trade despite correction in global peers amid trade worries.
The BSE Sensex rose 86.15 points to 39,800.35 and the Nifty50 gained 56.80 points at 11,979.60 in pre-opening trade.
Market Trend
By looking at weekly option data, 12,000 Call has significant open interest (OI), which is acting as a hurdle on the upside. However, ongoing positive trend in the index will remain intact until it holds 11,800 levels, ICICI Direct said.
The brokerage feels the index will consolidate in the range of 11,800-12,000 for a couple of trading sessions.
Nifty futures ended at a discount of 6 points with a rise in IVs by 2.86 percent on May 31. The highest Put base is at 11,500 strike with almost 23 lakh shares while the highest Call base is at the 12,500 strike with 17 lakh shares.
Asian markets Update
Major stocks in Asia were trading lower amid increasing concerns over the state of global trade which could hit global growth.
China's Shanghai Composite was down 0.7 percent, Japan's Nikkei fell over a percent and Hong Kong's Hang Seng declined 0.5 percent,
Gujarat Gas in Focus
HDFC Securities has intitiated coverage on Gujarat Gas with a buy rating and target price of Rs 222, implying 20 percent potential upside from current levels.
City gas distribution (CGD) companies deserve higher valuation multiples than utilities considering they are (1) Unregulated, (2) Relatively less capex-intensive, and (3) Competing for sales against viable alternatives (in industrial/commercial markets), the brokerage said.
It believes their pricing freedom derives from the fact that superior returns in CGD can be reinvested and help increase the share of gas in India’s energy mix from 20 percent (from 6 percent currently) by 2025. This premium can only expand with time.
Fiscal Deficit
On the fiscal front, the latest data shows that the Government has been able to meet the revised fiscal deficit estimate of 3.4 percent of GDP. However, there has been Rs 1.45 lakh crore reduction in expenditure with Rs 69,140 crore cut in subsidies (major cut in food subsidy of Rs 69,394 crore), covering for Rs 1.57 lakh crore reduction in total receipts.
Now that FY19 estimates are revised, the FY20 might seem to be on the higher side, Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI said, adding given growth slowdown that the country is facing, the question arises whether the government should continue to focus on fiscal consolidation path or keep the deficit numbers constant for the next two years before reducing it further and try to propel growth.
Sticking to a particular number is not that important. Instead, the Government should strive to make credible, transparent and achievable fiscal rules, he said.
GDP Data for Q4 Was Weak
GDP growth plunged to 20-quarter low to 5.8 percent in Q4 FY19. With this, the full year FY19 GDP growth comes to 6.8 percent (5-year low) compared to 7.2 percent in FY18. GVA growth for FY19 stood at 6.6 percent compared to 6.9 percent in FY18.
Agriculture and Allied Activities grew at 2.9 percent in FY19, compared to last year growth of 5.0 percent. However, the projection of just-normal monsoon this year boosts the outlook of this sector for FY20, Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI said.
Market Update
SGX Nifty indicated higher opening in equity markets despite correction in global peers following fresh trade concerns between US and Mexico.
SGX Nifty was up 40 points at 11965.50.
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