Markets pare all the early gains to trade with cut of over half a percent

Indian markets after a positive start have pared all the gains and are trading with cut of over half a percent in early deals, with selling taking place across the board, even though the Asian peers remained mixed with some indices witnessing minor cuts on rising concern that Federal Reserve will pull the trigger on a rate hike in December. The domestic traders were concerned with news that centre and states on Sunday failed to reach a consensus on who will control which set of assessees under GST. The said meeting which came ahead of the formal meeting of the all powerful GST Council on November 25, was held after the Centre and states were deadlocked over the issue at two previous meetings. The GST Council will meet again on November 25 to work out the modalities. There is already concern in the market with demonetization issue impacting the parliament’s normal functioning. Also, lots of domestic as well as international brokerages see a significant decline in GDP growth in the second half of the current fiscal due to demonetization. Back on street, the sharp selling in heavyweights from realty, consumer durables, capital goods, autos and IT were dragging the markets lower and the Nifty after reclaiming the 8100 mark has once again slipped near the crucial psychological level of 8000.

The BSE Sensex is currently trading at 25988.25, down by 161.99 points or 0.62% after trading in a range of 25958.99 and 26270.28. There were just 7 stocks advancing against 22 stocks declining on the index, while one stock remained unchanged.

The broader indices too were trading in red; the BSE Mid cap index was down by 1.09%, while Small cap index lost 1.17%.

The few gaining sectoral indices on the BSE were IT up by 0.13%, TECK up by 0.11% and Metal up by 0.05%, while Realty down by 2.20%, Bankex down by 1.31%, Auto down by 1.14%, Power down by 0.80% and PSU down by 0.68% were the losing indices on BSE.

The top gainers on the Sensex were Wipro up by 0.67%, ONGC up by 0.54%, GAIL India up by 0.47%, Adani Ports &Special up by 0.42% and Coal India up by 0.20%. On the flip side, Power Grid down by 2.32%, SBI down by 1.94%, HDFC down by 1.67%, Dr. Reddys Lab down by 1.54% and Mahindra & Mahindra down by 1.30% were the top losers.

Meanwhile, ratings agency, Care Ratings in its latest report has estimated that Goss domestic product (GDP) growth is likely to be affected by 0.3- 0.5 percent due to demonetization in the current fiscal. Recently, the government had decided to withdraw Rs 500 and Rs 1,000 currency notes from the circulation and introduced new Rs 500 and Rs 2,000 notes. Prior to governments this move, rating agency had estimated a GDP growth of 7.8 percent for 2016-17.

The report noted that this move is expected to have a significant effect on the economy, particularly on the GDP growth prospects as various sectors would tend to get affected differentially on this score. According to CARE Ratings services sector would be impacted most from the move, mainly on account of losses in trade, hotel and transport, among others, due to the volume of cash transactions involved in these economic activities. It added that these losses can’t be recovered in the next quarter due to their inherent nature. The agency also said that SMEs will have a major problem in adjusting production schedules as both payments and receipts flow are in cash given their structures.

For the manufacturing sector it said that demand side issues would exist till such time that conditions stabilise and could get reversed in the fourth quarter. Hence, Industry is also expected to be impacted which will be more significant in the first 2-3 weeks post the decision. In a positive note, the agency added that banking sector will gain from the move due to the increase in deposits, which will be somewhat countered by a slowdown in other sectors like real estate. Further it said that agriculture is expected to be least impacted with major shock being absorbed in the first 2-3 weeks itself as there have been issues in sales at mandis due to the current cash crunch.

The CNX Nifty is currently trading at 8010.30, down by 63.80 points or 0.79% after trading in a range of 8008.60 and 8102.45. There were 11 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.78%, Hindalco up by 1.75%, HCL Tech up by 1.37%, Idea Cellular up by 1.13% and Wipro up by 1.02%. On the flip side, Indusind Bank down by 3.60%, Eicher Motors down by 3.00%, Power Grid down by 2.50%, SBI down by 2.36% and Bank Of Baroda down by 2.32% were the top losers.

The Asian markets were showing mixed trend, FTSE Bursa Malaysia KLCI was up by 2.56 points or 0.16% to 1,626.36, Shanghai Composite gained 27.41 points or 0.86% to 3,220.27, Taiwan Weighted increased by 32.14 points or 0.36% to 9,038.66, Hang Seng was higher by 57.46 points or 0.26% to 22,401.67 and Nikkei 225 surged by 131.05 points or 0.73% to 18,098.46

On the other hand, Jakarta Composite decreased 20.61 points or 0.4% to 5,149.50 and KOSPI Index was down by 2.93 points or 0.15% to 1,971.65.