Benchmarks continue weak trade; Metal, Bankex drag

Indian equity benchmarks continued to trade lower in the early noon session, on account of selling in blue chips counters such as Metal, Bankex, Auto, FMCG and Capital Goods. Besides, sustained capital outflows by foreign funds and selling by retail investors amid weak Asian cues, too influenced the market sentiment. Sentiment was weighed down 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. Sentiment further remained downbeat after industry body the Federation of Indian Chambers of Commerce and Industry (FICCI), has said that the Indian economy is expected to grow at 7.4 percent in the current fiscal, slightly lower than 7.6 percent projected in advance estimates of Central Statistics Office (CSO). Cautiousness in the markets remained since morning ahead of the derivatives F&O expiry and the Railway Budget tomorrow.  

On the global front, Asian markets were trading in red, as oil prices skidded after Saudi Arabia effectively ruled out production cuts by major producers anytime soon, sending investors into safe-havens such as the yen. Back home, in scrip specific development, shares of Punjab National Bank were trading down after the public sector lender declared a list of 904 wilful defaulters that owe close to Rs 11,000 crore to the bank. On the flip side, Punj Lloyd was trading higher after the company has secured an Rs 308 crore infrastructure order in Dubai, United Arab Emirates.

The BSE Sensex is currently trading at 23178.28, down by 231.90 points or 0.99% after trading in a range of 23140.17 and 23338.89. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.73%, while Small cap index down by 0.87%.

The top losing sectoral indices on the BSE were Metal down by 1.80%, Bankex down by 1.21%, Auto down by 1.18%, FMCG down by 1.00% and Capital Goods down by 0.97%, while they were no gainers on the sectoral index.

The top gainers on the Sensex were Infosys up by 1.29%, Asian Paints up by 0.63%, Hindustan Unilever up by 0.42%, Maruti Suzuki up by 0.36% and Reliance Industries up by 0.14%. On the flip side, Tata Motors down by 3.34%, NTPC down by 2.87%, BHEL down by 2.59%, ONGC down by 2.45% and Cipla down by 2.22% 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 7042.25, down by 67.30 points or 0.95% after trading in a range of 7031.00 and 7080.15. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.88%, Power Grid up by 1.75%, Infosys up by 1.33%, Maruti Suzuki up by 0.51% and Asian Paints up by 0.44%. On the flip side, Tata Motors down by 3.53%, NTPC down by 2.83%, Cairn India down by 2.73%, BHEL down by 2.64% and ONGC down by 2.47% were the top losers.

Asian markets were trading in red; Hang Seng decreased 303.96 points or 1.57% to 19,110.82, Nikkei 225 decreased 127.64 points or 0.8% to 15,924.41, Taiwan Weighted decreased 51.78 points or 0.62% to 8,282.86, Shanghai Composite decreased 18.77 points or 0.65% to 2,884.56, FTSE Bursa Malaysia KLCI decreased 9.55 points or 0.57% to 1,667.73, Jakarta Composite decreased 9.21 points or 0.2% to 4,644.85 and KOSPI Index decreased 1.69 points or 0.09% to 1,912.53.