Benchmarks trade slightly in red on Fed rate hike worries

Indian equity markets have cautious start and are trading slightly in red in early deals on Friday after US Fed Chairman Janet Yellen’s testified that chance of December rate hike has risen on improving US economy. Sentiments also remained dampened after the rupee dropped to a 5-month low on the back of strong gains in the US dollar. However, losses remained capped as traders took some sense of relief with NITI Aayog Vice-Chairman Arvind Panagariya’s statement that India can become a $10 trillion economy in the next 15 years, like China did in last one and a half decade. He said there is much scope for India to benefit from Chinese experience in the manufacturing sector and make the country into a robust & steady economy.

On the global front, Asian markets were trading mostly in red at this point of time after Federal Reserve Chair Janet Yellen signaled an interest-rate hike could be imminent. The US markets closed modestly higher in last session, with major averages finishing the session near their best levels of the day, following the release of a batch of largely upbeat U.S. economic data.

Back home, stocks related to software pack continue to reel under pressure after Nasscom has revised IT sector’s growth forecast downwards to 8-10 per cent this year, as its biggest members such as TCS, Wipro, Cognizant and Infosys struggle to grow faster because of an uncertain environment. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 741 shares on the gaining side against 1,098 shares on the losing side while 87 shares remain unchanged.

The BSE Sensex is currently trading at 26174.13, down by 53.49 points or 0.20% after trading in a range of 26117.82 and 26272.84. There were 12 stocks advancing against 17 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading in mixed; the BSE Mid cap index gained 0.16%, while Small cap index was down by 0.53%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.97%, Energy up by 0.73%, Utilities up by 0.73%, Power up by 0.66% and PSU up by 0.41%, while Consumer Durables down by 1.48%, Metal down by 0.96%, TECK down by 0.71%, IT down by 0.70% and FMCG down by 0.69% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.01%, Sun Pharma up by 1.58%, ONGC up by 1.32%, Mahindra & Mahindra up by 0.87% and Power Grid up by 0.83%. On the flip side, Tata Motors down by 2.02%, Dr. Reddys Lab down by 1.74%, TCS down by 1.51%, Wipro down by 1.43% and Tata Steel down by 1.04% were the top losers.

Meanwhile, after the governments’ surprise decision to withdraw high-denomination bank notes of Rs 500 and Rs 1,000 from market, the currency in circulation reduced by 50 basis points in the week ended November 11, 2016, and the currency in circulation during the week under review declined by Rs 9,700 crore to Rs 17,87,700 crore, compared to the previous week. As per the Reserve Bank of India’s (RBI) data  the bankers' deposits with RBI during week under review rose to 4500 crore to 4,41,000 crore as compared to the previous week. 

However, as per the RBI’s data on reserve money, during the week ended November 4, the currency in circulation had grown by Rs 20,100 crore to Rs 17,97,400 crore and during the week ended October 28, the stock of currency in circulation had risen by Rs 18,200 crore to Rs 17,77,300 crore. On November 8 mid night, the government had announced the demonetisation move and asked people to deposit Rs 500 and Rs 1,000 old notes in their bank accounts or exchange them at bank counters before December 30, 2016.

The small business such as roadside restaurants, vegetable vendors and grocery stores were impacted due to the shrinking currency in circulation, as their mode of transaction is cash. Further, daily labourers, too, were rendered jobless as construction and other activities came to a standstill in view of cement, sand and other supplies not coming in. Vegetable and fruit wholesale markets, as well as foodgrain mandis in many parts, also reported very low business due to a shortage of cash. Even big hotels and malls reported a drop in footfall as out-of-cash public decided to skip them.

The CNX Nifty is currently trading at 8073.50, down by 6.45 points or 0.08% after trading in a range of 8048.30 and 8104.65. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.31%, Eicher Motors up by 2.14%, Sun Pharma up by 1.80%, ONGC up by 1.23% and Aurobindo Pharma up by 1.10%. On the flip side, Tata Motors down by 1.74%, Zee Entertainment down by 1.49%, Dr. Reddys Lab down by 1.44%, Grasim Industries down by 1.38% and TCS down by 1.29% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite decreased 35.69 points or 0.69% to 5,157.32, Shanghai Composite slipped 7.95 points or 0.25% to 3,200.50, FTSE Bursa Malaysia KLCI shed 6.93 points or 0.43% to 1,619.84 and KOSPI Index was down by 4.48 points or 0.23% to 1,976.07.

On the flip side, Taiwan Weighted gained 17.93 points or 0.2% to 9,013.19, Hang Seng added 55.78 points or 0.25% to 22,318.66 and Nikkei 225 was up by 125.63 points or 0.7% to 17,988.26.