Indian equity benchmarks enter into negative territory

Benchmarks entered into negative territory in late afternoon session on account of profit booking amid muted trend in Asian markets, while investors remained uncertain about the long-term impact of the demonetisation of the Rs 500 and Rs 1000 notes. The government today announced some new measures to ease the cash crunch caused by the move, including allowing farmers to draw money from banks against loans sanctioned to them. However, market participants failed to get any sense of relief with the private report that India's bank note reform has pushed up deposit growth and boosted liqudity that may in turn depress inflationary pressures. Though, down side remained capped with Moody’s Investors Service affirming India’s sovereign rating at ‘Baa3’ with a positive outlook, saying it expects policymakers to continue reforms to achieve balanced growth and reduce the government's debt load. Moody's further said that India's policy makers have taken important steps to strengthen the country's institutions. On the global front, European stocks were trading in green on Thursday, as oil prices resumed downward trend after bearish inventory data and caution crept in ahead of the U.S. Federal Reserve Chair Janet Yellen's speech later in the day.

The BSE Sensex is currently trading at 26273.45, down by 25.24 points or 0.10% after trading in a range oesf 26166.90 and 26449.87. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index dropped 0.23%, while Small cap index was down by 0.44%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.56%, PSU up by 0.34%, Power up by 0.32%, Metal up by 0.31% and FMCG up by 0.27%, while TECK down by 1.12%, IT down by 0.85%, Consumer Durables down by 0.45% and Capital Goods down by 0.27% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.80%, Cipla up by 1.55%, GAIL India up by 1.53%, Lupin up by 1.52% and Power Grid up by 1.41%. On the flip side, Bharti Airtel down by 3.41%, Coal India down by 3.04%, Asian Paints down by 1.67%, Bajaj Auto down by 1.62% and TCS down by 1.47% were the top losers.

Meanwhile, global credit rating agency, Moody's Investors Service (Moody's) has affirmed India's Baa3 ratings (the lowest investment grade) and maintained the positive outlook on the rating. The positive outlook indicates Moody’s expectation that continued policy reform implementation will allow balanced growth to support reduction in government debt burden. Moody's has also affirmed India's P-3 short-term local currency issuer rating.

Moody's further said that India's policy makers have taken important steps to strengthen the country's institutions. However, it said that the reform effort of the government to date has not yet achieved the conditions that would support an upgrade. Therefore, it said that to reduce the government's debt burden the country still needed to accelerate private investment. 

Moody’s praised the government’s broad range of policy measures that are helpful to controlling inflation and limiting current account deficit. The implemented of policies is such as the passage and ongoing implementation of a range of economic reform measures, including the Goods and Services Tax and reform of the bankruptcy code, points to improvements in government effectiveness. It added that this assessment is also supported by higher rankings in the World Economic Forum Global Competitiveness Index and World Bank Worldwide Governance Indicators.

According to Moody's, so far private investment has not picked-up in response to the government's measures, denoting limited policy effectiveness. Investment has been constrained by high leverage in some sectors, a relatively unfavorable global environment and, in some cases, limited access to finance. Also, Businesses are likely to have opted to wait for more certainty about the tangible implications of reforms on their operating environment.

The CNX Nifty is currently trading at 8105.95, down by 5.65 points or 0.07% after trading in a range of 8065.25 and 8151.25. There were 24 stocks advancing against 26 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Tata Motors up by 3.69%, Hindalco up by 3.41%, Bank of Baroda up by 3.06%, Tata Motors - DVR up by 2.55% and Cipla up by 1.64%. On the flip side, Bharti Airtel down by 3.28%, Coal India down by 3.26%, Ambuja Cement down by 2.82%, ACC down by 2.39% and Zee Entertainment down by 1.79% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 0.42 points to 17,862.63, KOSPI Index increased 0.9 points or 0.05% to 1,980.55, Shanghai Composite rose 3.4 points or 0.11% to 3,208.45 and Taiwan Weighted was up by 33.04 points or 0.37% to 8,995.26. On other hand, Hang Seng decreased 17.65 points or 0.08% to 22,262.88, Jakarta Composite dipped 13.96 points or 0.27% to 5,171.51 and FTSE Bursa Malaysia KLCI was down by 0.56 points or 0.03% to 1,627.07.

All the European markets were trading in green; Germany’s DAX rose 5.24 points or 0.05% to 10,669.11, France’s CAC increased 7.21 points or 0.16% to 4,508.35 and UK’s FTSE 100 was up by 28.94 points or 0.43% to 6,778.66.