Benchmarks continue to trade in red in noon session

After getting a positive start, Indian benchmark indices immediately slipped into the negative terrain and continued to exhibit a weak trend till noon session, as investors decide to hold back on big bets ahead of the U.S. jobs data, which is expected to bolster the case for a US Fed interest rate hike. Besides, weakness in the rupee against the dollar too dampened sentiments. Indian rupee declined for the third straight day by losing 9 paise to 66.78 against the dollar on weakening demand as the appeal of the American currency grew with importers and banks. However, investors got some comfort from IMF’s statement that India's strong reform push in 2016 is welcome and should continue the pace. Adoption of the goods and services tax is poised to boost India's medium-term growth. It added that as shown by India, progress on reforms could ignite business investment (including already strong FDI inflows), further boosting domestic demand. Also, the Commerce Minister Nirmala Sitharaman lauded the increase in FDI in India but said it will be meaningful only when it translates into increased job creation. Sitharaman said the government was now working towards adding infrastructure capabilities in tier-III cities and rural areas for the benefits of increased foreign investment to percolate down.

On the global front, investors’ worry sent Asian equities lower on Friday, as increasingly heated discussions over the U.K.’s exit from the European Union saw the pound plunging against the U.S. dollar. Market participants will keenly await data from Japan’s leading index, Britain’s industrial production and US non-farm payrolls later in the day. Employment is expected to increase by 168,000 jobs in September after climbing by 151,000 jobs in August. The unemployment rate is expected to hold at 4.9 percent. Meanwhile, reports of OPEC members considering more production cuts than expected and a drop in US weekly crude inventories pushed crude oil prices to a four-month high.

Back home, stocks from Metal and Power counters were supporting the markets, while those from IT, Oil & Gas and Consumer Durables counters were adding to the underlying cautious undertone. In scrip specific development, Fiem Industries has rallied after the company signed technology License and assistance agreement with Japanese companies Aisan Industry Co and Toyota Tsusho Corporation for manufacturing Canister. Moreover, Tata Motors jumped after the company’s arm Jaguar Land Rover (JLR) achieved a strong 28% year on year growth in global sales during the month of September.

The market breadth remained optimistic as there were 1225 shares on the gaining side against 1206 shares on the losing side, while 176 shares remained unchanged.

The BSE Sensex is currently trading at 28014.51, down by 91.70 points or 0.33% after trading in a range of 28010.85 and 28155.68. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.08%, while Small cap index down by 0.09%.

The few gaining sectoral indices on the BSE were Metal up by 0.31% and Power up by 0.09%, while IT down by 0.82%, Oil & Gas down by 0.73%, TECK down by 0.71%, Consumer Durables down by 0.67% and Capital Goods down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.53%, Tata Motors up by 1.22%, Lupin up by 0.83%, Power Grid up by 0.62% and GAIL India up by 0.53%. On the flip side, Cipla down by 1.39%, Asian Paints down by 1.37%, HDFC down by 1.32%, Bajaj Auto down by 1.15% and TCS down by 1.02% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its latest report has said that the implementation of goods and services tax (GST) bill will improve India's medium-term growth prospects. It added that as shown by India, progress on reforms could ignite business investment including already strong FDI inflows, further boosting domestic demand.

As per the report, India's growth has continued to benefit from the large improvement in the terms of trade, positive policy actions, including implementation of key structural reforms, gradual reduction of supply-side constraints, and a rebound in confidence.  It added that monsoon rainfall coming in at normal levels which is good for agriculture and, along with a decennial rise in government employee salaries, will support the ongoing recovery in domestic demand. It noted that consumption growth has remained strong and activity in core industrial sectors has picked up and government consumption is set to continue to support growth in 2016. 

According to IMF, greater labour market flexibility and product market competition remain essential to create jobs and raise growth. Priorities also include effective implementation of the new corporate debt restructuring mechanisms. Over the medium term, a number of Asian economies stand to benefit from a demographic dividend, as the working-age population in some economies like India and Indonesia continues to grow, potentially helping sustain strong potential growth.

In its report, the IMF stated that India's GDP growth is projected at 7.6 per cent in both 2016/17 fiscal year (ending in March 2017) and 2017/18 fiscal year, up 0.1 percentage point relative to the April 2016. It also stated that medium-term growth has been revised down to 5.8 per cent from 6.2 per cent, reflecting rising vulnerabilities and slower progress on reining in credit growth and on state- owned-enterprise reform.

The CNX Nifty is currently trading at 8680.85, down by 28.70 points or 0.33% after trading in a range of 8675.20 and 8723.70. There were 17 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Tata Motors - DVR up by 2.65%, Tata Steel up by 2.36%, Tata Motors up by 1.41%, Zee Entertainment up by 1.31% and Tata Power up by 1.08%. On the flip side, Bharti Infratel down by 2.18%, BPCL down by 2.02%, Asian Paints down by 1.57%, HDFC down by 1.40% and Eicher Motors down by 1.34% were the top losers.

All the Asian markets were trading in red; Hang Seng decreased 0.62%, Nikkei 225 dipped 0.3%, Taiwan Weighted slipped 0.2%, Jakarta Composite fell 0.51%, KOSPI Index shed 0.62% and FTSE Bursa Malaysia KLCI was down by 0.09%.