Benchmarks trade with marginal losses in early deals

Snapping their two-day northward journey, Key Indian benchmarks have made negative start and are now trading near neutral line with marginal losses in early deals on Friday, tracking weakness in global markets, after the recent rally in oil prices reversed, stoking concerns regarding the outlook of the global economy. However, the session was productive for broader indices, which outperforming larger counterparts were trading with gains in the range of 0.15-0.20%. Traders were getting encouragement with Moody's Investors Service stating that Indian economy will grow at 7.5 percent in 2016 and 2017 as it is relatively less exposed to external headwinds, like China slowdown, and will benefit from lower commodity prices. The agency also said that it expects that the government will cut spending to maintain deficit broadly in line with 3.5% of GDP.  Further, Foreign institutional investors were net buyers in equities to the tune of Rs 419 crore on Thursday, as per provisional stock exchange data that too added positive milieu. Airline stocks were flying higher after most of them reported higher passenger load in January. SpiceJet was up 5% and Jet Airways surged 3%. On the sectoral front, traders were seen piling up position in Realty, Consumer Durables, Bankex, Auto and Power, while selling was witnessed in Metal, Oil & Gas and FMCG.

On the global front, the US markets ended lower on Thursday, ending a three-day winning streak, as Wal-Mart shares dragged on the market after a lackluster earnings report and oil prices pulled back. Asian markets were trading lower as a rally in oil prices reversed and investors remained cautious about the outlook for the global economy.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,150 and 23,600 levels respectively. The market breadth on BSE was positive in the ratio of 738:620 while 73 scrips remained unchanged.

The BSE Sensex is currently trading at 23605.55, down by 43.67 points or 0.18% after trading in a range of 23508.36 and 23673.79. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index up by 0.20%.

The top gaining sectoral indices on the BSE were Realty up by 0.68%, Consumer Durables up by 0.58%, Bankex up by 0.57%, Auto up by 0.55% and Power up by 0.40%, while Metal down by 0.47%, Oil & Gas down by 0.47% and FMCG down by 0.34% were the losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.22%, SBI up by 1.97%, Bajaj Auto up by 1.39%, Bharti Airtel up by 1.15% and Reliance Industries up by 1.10%. On the flip side, BHEL down by 1.54%, HDFC down by 1.17%, Coal India down by 1.04%, ITC down by 0.92% and GAIL India down by 0.80% were the top losers.

Meanwhile, Moody's Investors Service, in its latest report 'Global Macro Outlook 2016-17 - Global growth faces rising risks at time of policy constraint', while pointed that global growth will fail to pick up steam over the next two years as the slowdown in China, lower commodity prices and tighter financing in some countries weigh on the economy, but has said that Indian economy will grow at 7.5 percent in 2016 and 2017 as it is relatively less exposed to external headwinds, like China slowdown, and will benefit from lower commodity prices.

It also said that with stable GDP growth at around 7.5 percent in 2016 and 2017, the growth rate gap with other G20 emerging markets will be unusually large. In the five years to the end of the decade, we expect GDP per capita (at market exchange rates) to increase by 34 percent in real terms in India, compared with only 3.6 percent in the G20 emerging markets excluding China and India. Elaborating further it said that together with Turkey and China among the G20 emerging markets, India benefits from lower commodity prices: in 2014, net commodity imports amounted to 5.9 percent of India's GDP, compared with net exports worth 1.3 percent, 3.3 percent and 4.3 percent for South Africa, Brazil and Indonesia respectively.

Moody’s said that India's economy is powered by sustained growth in consumer spending, fostered by moderate inflation, still favourable demographics and strengthening investment, in particular foreign direct investment. It said that the 23.55 percent increase in public sector salaries proposed by the 7th Pay Commission is worth 0.7 percent of GDP and will contribute to strong consumption growth. However, the pay increase will also probably raise inflationary pressures, but the government will cut spending in other parts of the budget to maintain the deficit broadly in line with the 3.5 percent of GDP objective, thereby mitigating some of the inflationary effects.

The agency also, warned the generally robust economic environment is constrained by ‘banks' balance sheet repair and elevated corporate debt' and corporate pricing power being limited by the impact on food price inflation and households budgets of two consecutive droughts.

The CNX Nifty is currently trading at 7186.30, down by 5.45 points or 0.08% after trading in a range of 7145.95 and 7186.45. There were 22 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were PNB up by 2.28%, Bank Of Baroda up by 1.66%, ICICI Bank up by 1.30%, Reliance Industries up by 1.23% and Bajaj Auto up by 1.19%. On the flip side, BPCL down by 2.25%, Vedanta down by 2.24%, Hindalco down by 1.45%, Cairn India down by 1.34% and Coal India down by 1.23% were the top losers.

Asian markets were trading in lower, Nikkei 225 decreased 360.57 points or 2.23% to 15,836.23, Hang Seng decreased 106.55 points or 0.55% to 19,256.53, Jakarta Composite decreased 59.94 points or 1.25% to 4,718.85, Taiwan Weighted decreased 14.49 points or 0.17% to 8,300.18, Shanghai Composite decreased 13.76 points or 0.48% to 2,849.13, KOSPI Index decreased 2.48 points or 0.13% to 1,906.36 and FTSE Bursa Malaysia KLCI decreased 2.46 points or 0.15% to 1,677.56.