Weak trade persist in late morning session

Indian equity benchmarks continued their weak trade in late morning session on account of selling in front line blue chip counters. The sentiments were under pressure as the US Fed gave more signals that it was inclined towards a rate hike in December. The impact of demonetisation which shocked the economy also continued to weigh on investors. The Indian rupee extended its losses for the fifth consecutive day and was trading down against the US dollar, its lowest level since August 2013. Sentiments turned extremely weak in the forex market due to consistent selling by foreign investors in the backdrop of demonetisation and renewed fears of a Fed rate hike. Foreign Institutional Investors (FIIs) have withdrawn over Rs 3,700 crore from equity markets this week. The sentiments also weighed down after Commerce and Industry Minister Nirmala Sitharaman said that economic output in the current quarter may get affected, with the government’s demonetization drive temporarily hitting commercial activities in some sectors. Global investment firm has forecasted a deceleration in India’s GDP growth to 6.8% this fiscal, down from 7.6% last financial year, due to demonetisation of Rs 500 and Rs 1000 currency notes. According to the global financial services major, post the dramatic currency reform the liquidity shortage would be a significant constraint on domestic activity, which in turn would affect GDP growth. Traders were seen piling up positions in IT, Metal and TECK stocks, while selling was witnessed in Power, Auto and Oil & Gas sector stocks. In the scrip specific development, Oil India was trading in green after the company informed stock exchanges that its board members will consider bonus issue of shares at a meeting on November 28. The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. November 2016 series to next month i.e. December 2016 series. The near month November 2016 derivatives contracts will expire today i.e. November 24, 2016.

On the global front, Asian shares were trading mostly in red, in response to strong overnight US economic data that pointed to rate rises, more dollar strength and the possibility of more capital flight from Asia. China’s central bank fixed the yuan 0.26% weaker against the US dollar Thursday, and has guided the currency weaker for most of this month amid a broad-based rally in the US dollar. Japan stocks, as usual, were a beneficiary of this trend, as a weaker yen boosts the competitiveness of the country’s exporters.

The BSE Sensex is currently trading at 25957.98, down by 93.83 points or 0.36% after trading in a range of 25880.78 and 26049.14. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.28%, while Small cap index was up by 0.09%.

The gaining sectoral indices on the BSE were IT up by 0.65%, Metal up by 0.47% and TECK up by 0.34%, while Power down by 1.00%, Auto down by 0.80%, Oil & Gas down by 0.78%, Bankex down by 0.72% and Realty down by 0.45% were the losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.87%, Infosys up by 0.93%, SBI up by 0.68%, TCS up by 0.61% and Bajaj Auto up by 0.53%.

On the flip side, Tata Motors down by 2.42%, NTPC down by 2.06%, ICICI Bank down by 1.43%, GAIL India down by 1.09% and Sun Pharma down by 1.08% were the top losers.

Meanwhile, supporting the government’s surprise decision to withdraw high-denomination bank notes of Rs 500 and Rs 1,000, Niti Aayog CEO Amitabh Kant has said that India is moving towards a totally formalized economy that will bring huge gains in the long-term.  He said that 'There are long-term gains for the country (from demonetisation). The country will move towards a totally digitised payment economy. It will move towards formalised economy.'

The Niti Aayog CEO added that it is a massive and unparalleled thing that would create some short-term issues but in the long-term there would be huge gains. He further added that India is moving from non-formal economy to a formal economy, therefore the people should have patience and faith.

Earlier, the Vice Chairman of NITI Aayog, Dr. Arvind Panagariya too had said that the crackdown on black money by demonetization will bring down the inflation. The move will ensure that transactions will now go much more through the banking system which will ensure transparency. In order to curb corruption, the government on November 8, had declared demonetization of Rs 500 and Rs 1,000 note replacing them with new Rs 500 and Rs 2,000 notes.

The CNX Nifty is currently trading at 7997.00, down by 36.30 points or 0.45% after trading in a range of 7973.95 and 8013.65. There were 19 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 1.87%, Hindalco up by 1.55%, Tech Mahindra up by 1.49%, Bank of Baroda up by 1.36% and Infosys up by 0.97%.

On the flip side, Zee Entertainment down by 3.07%, Eicher Motors down by 2.67%, Tata Motors down by 2.50%, Tata Motors - DVR down by 2.09% and NTPC down by 1.81% were the top losers.

The Asian markets were trading mostly in red; Jakarta Composite decreased 63.39 points or 1.22% to 5,148.60, Hang Seng decreased 60.61 points or 0.27% to 22,616.08, Taiwan Weighted decreased 19.24 points or 0.21% to 9,158.99, KOSPI Index decreased 14.39 points or 0.72% to 1,973.56 and FTSE Bursa Malaysia KLCI decreased 6.01 points or 0.37% to 1,624.37.

On the other hand, Shanghai Composite increased 3.07 points or 0.09% to 3,244.20 and Nikkei 225 increased 185.76 points or 1.02% to 18,348.70.