Benchmarks continue weak trade; Bankex, IT drag

Indian equity benchmarks were trading slightly in red in late morning session as banking stocks led fall on fresh selling amid mixed Asian cues. The sentiments were dampened after the Reserve Bank of India (RBI) on Saturday introduced an incremental CRR of 100% for the fortnight to absorb the surge in liquidity in banking system following demonetisation of high value notes. The rupee wiped off its opening gains and was trading down against the dollar in early trade amid continued buying of the American currency by banks and importers. Foreign institutional investors were net sellers in domestic equity market on Friday, as they offloaded shares worth of Rs 2,038 crore, according to the data available with NSDL. Gross purchases and gross sales stood at Rs 6,179 crore and Rs 8,217 crore, respectively. Investors will be keeping an eye on crude oil prices which is expected to rise as producing nations contemplate production cuts. The Organization of Petroleum Exporting Countries (OPEC), the cartel that accounts for a third of global oil production, is meeting in Vienna on November 30, 2016 for a possible production cut. Russia, the largest non-OPEC oil producer, is also proposing a production freeze at current levels of output. The downside was however capped with Fitch Ratings stating that while there are many facets to India’s demonetisation measure making it difficult to predict the impact on real Gross Domestic Product (GDP) growth, the growth will still be higher than China’s in the medium term. The report highlighted that in India it expects GDP growth to accelerate in FY2018 on the back of reform implementation, monetary easing of the past year and infrastructure spending, while in China a continued increase in leverage in the broader economy is more and more becoming a burden for growth. Traders were seen piling up positions in Oil & Gas, Power and Realty stocks, while selling was witnessed in Bankex, IT and Consumer Durables sector stocks.

On the global front, Asian shares were trading mostly in green, while Japanese stocks traded weaker after seven straight sessions of gains as the yen gained sharply against the dollar and oil prices slipped. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,150 and 26,300 levels respectively. The market breadth on BSE was positive in the ratio of 1402:661, while 105 scrips remained unchanged.

The BSE Sensex is currently trading at 26299.46, down by 16.88 points or 0.06% after trading in a range of 26183.22 and 26335.65. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.79%, while Small cap index was up by 0.86%.

The gaining sectoral indices on the BSE were Oil & Gas up by 1.61%, Power up by 1.55%, Realty up by 1.02%, PSU up by 0.80% and Auto up by 0.57%, while Bankex down by 1.10%, IT down by 0.29%, Consumer Durables down by 0.21% and Metal down by 0.12% were the losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 3.49%, Bharti Airtel up by 3.21%, Cipla up by 1.92%, Hero MotoCorp up by 1.12% and Bajaj Auto up by 0.80%.

On the flip side, ICICI Bank down by 1.92%, SBI down by 1.80%, Wipro down by 1.48%, TCS down by 1.47% and HDFC down by 1.26% were the top losers.

Meanwhile, NITI Aayog CEO Amitabh Kant said that bold and structural reforms like demonetization, goods and services tax (GST) and Bankruptcy Law will boost the economic growth by plugging leakages through promoting further adoption of digital payment mechanisms. He said that currently, India is growing at about 7.5-7.6 percent, it is very hungry and ambitious for growth of 9-10 percent.

Kant said that the biggest economic revolution by demonetizing will be successful only if digital payment system is adopted at mass level. Pointing-out the benefits of moving towards a cashless, digitized economy, he said it can eliminate corruption, counterfeiting and financing for terror activities. He added that “Once you move to a digitized economy you plug all these loopholes to ensure that there are no leakages. What will happen as a consequence is that your economy is able to move, banks will get flush with funds, interest rates will come down, tax rates will come down and over a period of time demonetization will enable you to give a bigger spurt to your economy”.

Laying out a multi-pronged approach for India to achieve 9-10 percent economic growth over a period of three decades, NITI Aayog chief said that the country needs to have consistency and predictability in the policy regime, coupled with factors like market reforms in land and labour, and bring about women’s emancipation. Further he said that unless we penetrate global markets it will be very difficult for India to grow at rate of 9 to 10 percent.

The CNX Nifty is currently trading at 8107.95, down by 6.35 points or 0.08% after trading in a range of 8066.50 and 8119.95. There were 31 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.73%, Idea Cellular up by 3.05%, Bharti Airtel up by 2.99%, Power Grid up by 2.76% and Grasim Industries up by 2.12%.

On the flip side, Bank of Baroda down by 2.38%, ICICI Bank down by 1.96%, SBI down by 1.76%, Wipro down by 1.62% and TCS down by 1.62% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.93 points or 0.06% to 1,628.19, KOSPI Index increased 6.64 points or 0.34% to 1,981.10, Shanghai Composite increased 17.98 points or 0.55% to 3,279.92, Taiwan Weighted increased 57.76 points or 0.63% to 9,216.83 and Hang Seng increased 181.84 points or 0.8% to 22,905.29.

On the other hand, Nikkei 225 decreased 41.45 points or 0.23% to 18,339.77 and Jakarta Composite decreased 11.83 points or 0.23% to 5,110.27.