Benchmarks trade slightly in red in early deals

Indian equity benchmarks have made a weak start and are trading slightly in red as traders remained cautious ahead of the US Fed’s rate hike decision later in the day, also the domestic rating agency ICRA has said that with consumption being affected by the demonetisation of higher currency old notes, tax revenues of the State governments for the current financial year is likely to be weaker than budgeted. However, losses remained capped as some support came with positive economic data, while the retail inflation fell to a two-year low in November due to the ongoing cash crunch following the demonetization drive, the country’s current account deficit (CAD) narrowed by more than a percentage point to 0.6 percent of GDP at $ 3.4 billion in the July-September, on account of lower trade deficit.

On the global front, Asian markets trading mostly in green at this point of time, as investors are sure that the Federal Reserve would raise rates for the first time in a year. The US markets moved higher in last session, with all three of the major averages touched new record closing highs, ahead of the Federal Reserve's monetary policy decision, scheduled to be announced on Wednesday.

Back home, the market breadth is positive as 973 stocks fall while 791 advance on the Bombay Stock Exchange. In scrip specific development, shares of Coal India fell around three percent after the company reported a massive 77% fall in its consolidated net profit at Rs 600 crore for the quarter ended September, hit by drop in sales and higher expenses. However, TCS was trading higher after Cyrus Mistry was removed as director of TCS with over 93% votes for his ouster, 100% of promoter group votes and 57% of public institutional shareholders voted to remove him.

The BSE Sensex is currently trading at 26670.49, down by 27.33 points or 0.10% after trading in a range of 26624.66 and 26736.34. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.13%, while Small cap index was up by 0.23%.

The top gaining sectoral indices on the BSE were Realty up by 1.03%, Oil & Gas up by 0.31%, Consumer Durables up by 0.19%, Power up by 0.15% and IT was up by 0.11%, while Capital Goods down by 0.38%, PSU down by 0.32%, Metal down by 0.30%, Auto down by 0.24% and Bankex was down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.30%, Reliance Industries up by 1.30%, Asian Paints up by 1.27%, Tata Steel up by 0.97% and Sun Pharma up by 0.78%. On the flip side, Coal India down by 2.93%, HDFC down by 1.13%, Larsen & Toubro down by 0.69%, Bharti Airtel down by 0.68% and ONGC down by 0.66% were the top losers.

Meanwhile, in fallout to government’s demonetization drive, the Asian Development Bank (ADB) has lowered India’s gross domestic product (GDP) growth forecast to 7% in FY17 from its earlier estimate of 7.4%, citing adverse impact of demonetisation in the short run. However, the multilateral agency has retained its earlier projection of 7.8% GDP growth for the country in FY18.

In its Asian Development Outlook 2016 update, ADB said its lower growth projection for India is due to weak investments, a slowdown in the country’s agriculture sector, and the lack of available cash due to the government’s decision to ban high-denomination banknotes. However, it added that the effects of the transition are expected to be short-lived and the Indian economy is expected to grow at 7.8% in 2017.

The multilateral agency lowered its 2016 economic growth forecast for Asia to reflect slower-than-expected expansion in India, slightly lower than its previous forecast of 5.7 percent. However, the ADB left its growth projection for 2017 unchanged at 5.7 percent. ADB trimmed its growth forecast for south Asia as well as developing Asia too. South Asia’s growth is now projected at 6.6% in 2016 from 6.9% while developing Asia except Japan is expected to grow at 5.6% during the same year, down from 5.7% expected earlier. Regarding China it said that it is expected to hit 6.6% this year, driven by strong domestic consumption, solid wage growth, urban job creation, and public infrastructure investment. The forecast for the PRC in 2017 is maintained at 6.4%.

The CNX Nifty is currently trading at 8205.05, down by 16.75 points or 0.20% after trading in a range of 8192.00 and 8229.40. There were 17 stocks advancing against 33 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Asian Paints up by 1.57%, Reliance Industries up by 1.34%, Bharti Infratel up by 1.31%, Axis Bank up by 1.21% and Tata Steel up by 0.99%. On the flip side, Coal India down by 3.04%, Tata Motors - DVR down by 1.19%, Idea Cellular down by 1.17%, ACC down by 1.16% and HDFC down by 1.15% were the top losers.

Asian markets were trading mostly in green; KOSPI Index gained 0.47 points or 0.02% to 2,036.45, Shanghai Composite rose 2.03 points or 0.06% to 3,157.06, Nikkei 225 added 17.04 points or 0.09% to 19,267.56 and Hang Seng was up by 134.71 points or 0.6% to 22,581.41.

On the flip side, Taiwan Weighted decreased 6.64 points or 0.07% to 9,375.50, Jakarta Composite slipped 6.08 points or 0.11% to 5,287.54 and FTSE Bursa Malaysia KLCI was down by 2.73 points or 0.17% to 1,642.55.