Markets continue lackadaisical trade; Sensex slips below 26300 level

Indian equity indices continued their lackluster trade in late afternoon session on account of selling in frontline blue-chip stocks. Sentiments remained dampened with the ratings agency, Crisil lowering India’s Gross Domestic Product (GDP) growth forecast by 1 percent to 6.9 percent for 2016-17 from 7.9 percent forecasted earlier, saying economic recovery from demonetisation will take at least a couple of months, translating into a GDP growth of 6.6 percent for the second half, compared with 7.2 percent in the first half. Meanwhile, the Reserve Bank of India has decided to revise ceiling for issue of securities under Market Stabilisation Scheme (MSS) to Rs 6 lakh crore from Rs 30,000 crore earlier. On the global front, European markets made a negative start on Friday as political uncertainty in Italy and France intensified. Sunday's referendum in Italy continues to worry investors as it could spark fresh elections and complicate the recapitalization process of Italian banks. Investors also remained cautious ahead of the U.S. jobs report due tonight. Back home, power stocks gained traction after Moody’s Investors Service upgraded India’s power sector outlook to stable from negative, because the increased domestic production of coal will ease constraints on fuel supply.

The BSE Sensex is currently trading at 26340.47, down by 219.45 points or 0.83% after trading in a range of 26463.06 and 26289.65. There were 9 stocks advancing against 19 stocks declining on the index, while 2 stocks remained unchanged.

The broader indices were trading in red; the BSE Mid cap index dropped 0.86%, while Small cap index down by 0.82%.

The sole gaining sectoral index on the BSE was Power up by 0.16%, while Consumer Durables down by 1.35%, FMCG down by 1.17%, Oil & Gas down by 1.02%, Realty down by 1.01% and Capital Goods down by 0.95% were the major losing indices on BSE.

The top gainers on the Sensex were NTPC up by 0.68%, Cipla up by 0.60%, Coal India up by 0.47%, Sun Pharma up by 0.40% and SBI up by 0.31%. On the flip side, Asian Paints down by 3.09%, Tata Motors down by 2.71%, HDFC down by 1.77%, Dr. Reddys Lab down by 1.74% and Maruti Suzuki India down by 1.51% were the top losers.

Meanwhile, global ratings agency, Crisil has lowered India’s Gross Domestic Product (GDP) growth forecast by 1 percent to 6.9 percent for 2016-17 from 7.9 percent forecasted earlier, saying economic recovery from demonetisation will take at least a couple of months, translating into a GDP growth of 6.6 percent for the second half, compared with 7.2 percent in the first half. At the same time, Crisil also said that the jolt to demand will also pull inflation down thus, it expects the consumer price index (CPI)-based inflation to print lower at 4.7 percent as compared to its earlier estimation of 5 percent.

The ratings agency said that the pain of demonetisation will be frontloaded and the benefits will be felt over a period of time. It also said that uncertainty coupled with a fall in consumption demand and inventory build-up, will push back recovery in private corporate investments. Additionally, it said that the problem gets compounded because of a preponderance of cash transactions in the humongous informal sector, which cannot be accurately measured or monitored.

Further talking on government's demonetisation move, Crisil said that the problem is, the infusion of replacement notes has been very sluggish and the ensuing cash choke has pulled back the business cycle, which was beginning to accelerate on the back of a good monsoon, the seventh pay commission pay hike, and the one rank one pension scheme for veterans. It added that the cash crunch will impact private consumption demand (55 per cent of GDP) directly, and cull GDP growth in the third and fourth quarters of the current fiscal.

The CNX Nifty is currently trading at 8123.75, down by 69.15 points or 0.84% after trading in a range of 8103.85 and 8159.30. There were 18 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 2.69%, Tata Power up by 1.51%, Tech Mahindra up by 1.04%, Bosch up by 0.92% and Coal India up by 0.87%. On the flip side, BPCL down by 3.28%, Kotak Mahindra Bank down by 3.02%, Asian Paints down by 2.88%, Tata Motors down by 2.83% and Aurobindo Pharma down by 2.61% were the top losers.

Asian markets were trading mostly in red; Hang Seng dropped 313.41 points or 1.37% to 22,564.82, Nikkei 225 declined 87.04 points or 0.47% to 18,426.08, Taiwan Weighted slipped 74.04 points or 0.8% to 9,189.49, Shanghai Composite decreased 29.47 points or 0.9% to 3,243.84 and KOSPI Index was down by 13.14 points or 0.66% to 1,970.61. On the other hand, FTSE Bursa Malaysia KLCI increased 2.74 points or 0.17% to 1,629.18 and Jakarta Composite was up by 40.07 points or 0.77% to 5,238.82.

All the European markets were trading in red; Germany’s DAX slipped 105.31 points or 1% to 10,428.74, UK’s FTSE 100 decreased 57.33 points or 0.85% to 6,695.60 and France’s CAC was down by 46.15 points or 1.01% to 4,514.46.