Indian equities continue to reel under pressure in late morning session

After getting a gap-down start, Indian equity benchmarks continued their weak trade in the late morning session on sustained capital outflows by foreign funds and selling by retail investors amid subdued Asian shares. Sentiments remained down-beat with Moody's Investors Service’s statement that India's fiscal metrics will remain weaker than its peers in the near term even if Finance Minister Arun Jaitley was to stick to fiscal consolidation roadmap. It said that without fiscal consolidation going forward, India's government finances will continue to compare poorly to peers. However, market participants got some hope with  President Pranab Mukherjee described the country as a haven of ‘stability’ in a turbulent global economy, saying the government has simplified procedures for approvals, repealed obsolete laws and put in place a non-adversarial tax regime to attract investments. Innovative initiatives have helped India jump up 12 places in the latest rankings by the World Bank on ease of doing business, he added.

On the global front, Asian markets were trading lower tracking a slide in global crude oil prices after Saudi Arabia said that there would be no reduction in production by major oil producers. Saudi Arabia's oil minister, Ali Al-Naimi, told a meeting of energy leaders in Houston on Monday that output cuts aimed at boosting slumping crude prices won't work. He said that the market should instead let some operators go out of business. Meanwhile, US stocks slumped from six-week highs, with the Dow Jones Industrial Average falling more than 180 points as crude dropped on concern OPEC members won't curb output.

Back home, stocks from IT, Oil & Gas and Teck counters were supporting the markets’ uptrend, while those from Metal, Banking and FMCG counters were adding to the underlying cautious undertone. In scrip specific development, shares of Punjab National Bank have declined after the bank declared a list of 904 wilful defaulters that owe close to Rs 11,000 crore to the bank. On the global front, shares of Maruti Suzuki India have gained after the company restarted production at its two manufacturing facilities in Haryana after two days of suspension due to the Jat reservation agitation in the state.

The market breadth on BSE was negative, out of 2104 stocks traded, 589 stocks advanced, while 1374 stocks declined on the BSE. 

The BSE Sensex is currently trading at 23243.00, down by 167.18 points or 0.71% after trading in a range of 23227.42 and 23338.89. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.31%, while Small cap index down by 0.50%.

The top gaining sectoral indices on the BSE were IT up by 0.19%, Oil & Gas up by 0.14% and TECK up by 0.10%, while Metal down by 1.55%, Bankex down by 1.07%, FMCG down by 0.65%, PSU down by 0.64% and Auto down by 0.59% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.37%, Hindustan Unilever up by 0.84%, Asian Paints up by 0.80%, Maruti Suzuki up by 0.47% and Bharti Airtel up by 0.45%. On the flip side, NTPC down by 3.15%, Tata Motors down by 2.25%, Sun Pharma down by 2.08%, ONGC down by 2.05% and Adani Ports &Special down by 1.91% were the top losers.

Meanwhile, US-headquartered agency, Moody's Investors Service has said that it will closely watch India's fiscal consolidation plan in the upcoming Budget 2016-17. However, credit impact of fiscal policy will not be limited to forecasts of the fiscal road map, according to ratings agency, which said it will look for specific measures to expand revenue base and insulate government expenditure from economic shocks which will determine deficit outcomes in the medium term.

Moody's said that India's government finances will continue to compare poorly with those of its peers, in the absence of fiscal consolidation in the coming years. It further said that India's fiscal metrics will remain weaker than rating peers in the near term, because of the relatively high level of state and central government deficits and debt, even if budgetary consolidation continues. Moreover, it said that the fiscal consolidation process remains vulnerable to economic shocks, such as a fall in corporate profits or consumption growth, or an increase in subsidy costs, based on the trends in revenue and expenditure over the past five years.

Additionally it said that the fiscal improvements are likely to be limited in the near term, as in 2016-17, expenses could rise due to civil servant pay revisions and bank recapitalization costs. The current road map aims to reduce the Centre's deficit to 3.0% of GDP in 2018-19 rather than by 2017-18 under the original plan, from 4.1% in fiscal 2015. Over the past five years, the government's fiscal deficit has reduced, supporting the stabilisation of government debt ratios.

The CNX Nifty is currently trading at 7062.00, down by 47.55 points or 0.67% after trading in a range of 7053.00 and 7080.15. There were 13 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.40%, Infosys up by 1.42%, Power Grid up by 1.39%, Mahindra & Mahindra up by 0.68% and Hindustan Unilever up by 0.66%. On the flip side, NTPC down by 3.15%, Cairn India down by 2.34%, Tata Motors down by 2.29%, Sun Pharma down by 2.13% and ONGC down by 2.10% were the top losers.

Asian markets were trading in red, Hang Seng was down by 1.6%, Nikkei 225 down by 1.29%, Taiwan Weighted down by 0.83%, Jakarta Composite down by 0.21%, FTSE Bursa Malaysia KLCI down by 0.57% to, Shanghai Composite down by 0.21% and KOSPI Index was down by 0.14%.