Benchmarks trade choppy in early deals; broader markets outclass

Indian equity benchmarks are trading choppy in early deals on Monday, as traders remain concerned about International Monetary Fund (IMF) listing out as many as six core areas that need further reforms in India. It has warned that headwinds from weaknesses in the country’s corporate and bank balance sheets, decelerating pace of reforms and sluggish exports may weigh on its economic growth. However, broader markets were outperforming the larger peers as the BSE’s midcap and smallcap indices were trading with a gain of over half a percent.

Losses remained capped with some support coming from strong regional cues. Most of the Asian peers were trading in green at this point of time, as traders eye key central bank meetings in the US and Japan due later in the week.

Back home, traders got some sense of relief with report that Finance Minister Arun Jaitley will meet his counterparts in states to discuss proposed amendments to the GST Bill on Tuesday, with the likely listing of GST Bill in Rajya Sabha this week.

The BSE Sensex is currently trading at 27784.81, down by 18.43 points or 0.07% after trading in a range of 27736.51 and 27808.84. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.54%, while Small cap index up by 0.67%.

The top gaining sectoral indices on the BSE were Realty up by 1.37%, Oil & Gas up by 1.36%, PSU up by 1.12%, Energy up by 0.66% and Auto up by 0.49%, while Telecom down by 0.35%, Bankex down by 0.24%, Metal down by 0.15%, TECK down by 0.14% and IT down by 0.09% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 0.96%, Bajaj Auto up by 0.92%, Maruti Suzuki up by 0.89%, Cipla up by 0.77% and Sun Pharma up by 0.70%. On the flip side, Axis Bank down by 1.81%, Dr. Reddys Lab down by 1.79%, Bharti Airtel down by 1.01%, Infosys down by 0.55% and ICICI Bank down by 0.51% were the top losers.

Meanwhile, the International Monetary Fund (IMF) which recently lowered its GDP growth projection for India to 7.4 percent 2016 and 2017, from the 7.5 per cent in April, has warned that the headwinds from the weaknesses in the country's corporate and bank balance sheets, decelerating pace of reforms and sluggish exports may weigh on its economic growth, though it also said that India’s economy is on a recovery path, on the back of lower oil prices, positive policy actions and improved confidence.

IMF in its Note on 'Global Prospects and Policy Challenges' listed out six core areas namely product market, labour, infrastructure, banking, legal system and property rights, and fiscal structural reforms that need further improvement in India. The recommended six 'reform priorities' for India is higher than the same for several other emerging markets including China, Brazil and South Africa. Although, it said that India has done well on three out of nine 'reform priorities' including innovation, capital market development and trade and FDI liberalisation.

IMF in its report which was prepared for the two-day meeting of the G20 Finance Ministers and Central Bank Governors' Meetings said further steps to relax long-standing supply bottlenecks especially in the energy, mining, and power sectors as well as labour market reforms, are crucial to achieving faster and more inclusive growth. The report further raised concern that the country’s quality of fiscal consolidation should be improved through a comprehensive tax reform and measures to further reduce subsidies. On the back of shrinking fiscal buffers, many commodity exporters need to develop new growth models and tackle fiscal adjustment.

The CNX Nifty is currently trading at 8533.55, down by 7.65 points or 0.09% after trading in a range of 8517.20 and 8544.35. There were 27 stocks advancing against 23 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were BPCL up by 2.26%, BHEL up by 1.49%, Bharti Infratel up by 1.13%, Bajaj Auto up by 0.96% and Sun Pharma up by 0.93%. On the flip side, Axis Bank down by 1.72%, Dr. Reddys Lab down by 1.69%, Tata Power down by 1.04%, Bharti Airtel down by 0.87% and Kotak Mahindra Bank down by 0.82% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 4.51 points or 0.27% to 1,661.93, Shanghai Composite increased 7.12 points or 0.24% to 3,019.94, Nikkei 225 added 19.98 points or 0.12% to 16,647.23 and Jakarta Composite was up by 27.5 points or 0.53% to 5,224.75. On the flip side, Taiwan Weighted decreased 72.61 points or 0.81% to 8,940.53, Hang Seng slipped 63.6 points or 0.29% to 21,900.67 and KOSPI Index was down by 1.54 points or 0.08% to 2,008.80.