After opening the day flat, share markets in India have continued to trade rangebound, and are trading marginally below the dotted line. Sectoral indices are trading on a mixed note with stocks in the PSU sector and stocks in the energy sector leading the losses.
The BSE Sensex is trading down by 3 points (down 0.1%), and the NSE Nifty is trading down by 15 points (down 0.1%). Meanwhile, the BSE Mid Cap index is trading down by 0.3%, while the BSE Small Cap index is trading flat. The rupee is trading at 65.16 to the US$.
In news from the global economy. US and Asian shares witnessed buying activity after Chinese President Xi Jinping eased escalating tensions in the US-China trade war.
The Chinese president promised to open the country’s economy further and lower import tariffs on products including cars, which is seen address the concerns of US President Donald Trump as the two countries edged towards an all-out trade war.
Xi also said China would raise the foreign ownership limit in the automobile sector as soon as possible and push previously announced measures to open the financial sector.
Without mentioning Trump’s concern over the huge trade deficit, Xi said China does not seek trade surplus and have a genuine desire to increase imports and achieve greater balance of international payments under the current account.
Trump has been demanding China to cut down US$375 billion trade deficit by US$100 billion in about a month.
In addition, the Chinese president also promised that China will take measures to liberalise automobile investment, significantly lower the import tariffs on cars and protect intellectual property, indirectly addressing major complaints by the US amid the trade row.
The comments sent U.S. stock futures, the dollar and Asian shares higher.
The world’s top two economies had edged towards an all-out trade war after Trump administration last week published a list of about 1,300 Chinese exports worth US$50 billion that could be hit by US tariffs because of Beijing’s alleged theft of intellectual property and technology.
China hit back with a levy 25% tariffs on imports of 106 US products, bringing the total to US$3 billion in retaliation to Trump’s move to impose tariffs on steel and aluminium.
Moving on to news from the domestic economy. Asian Development Bank (ADB) in its latest report said that India’s GDP growth is set for a turnaround and will grow 7.3% in 2018–19 and 7.6% in 2019–20.
The bank said that factors such as policy oriented growth measures will spur growth going forward. It also highlighted that the below par growth of 6.6% in 2017–18 was driven in part by lingering effects of demonetisation, which impacted the informal sector in the first half of 2017–18.
Teething issues related to implementation of Goods and Services Tax (GST), which hampered operations of small and medium sized enterprises and exporters, also contributed to growth moderation.
GDP Growth Getting Back on Track
ADB said the growth will pick up as the new tax regime improves productivity, and bank reforms take their course, followed by corporate deleveraging to reverse a downtrend in investment.
India’s GDP grew by 7.2% in Q3 FY18. Manufacturing grew by 8.1% for the quarter compared to 7.9% in the same quarter last year. Cement, electricity, coal, and steel, the bedrock of the economy, all witnessed robust growth.
India also surpassed China as the world’s fastest growing economy. Rest assured, we’ll keep a close eye on this trend.
This article was originally published in English at www.equitymaster.com
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