Indian benchmarks continue to trade in red in noon session

Indian benchmark indices continued to trade in red in noon session as funds and retail investors engaged in reducing positions amid rising concern over Donald Trump's policies and the UKs position in the European Union. Sentiments remained down-beat with report that International Monetary Fund (IMF) cut India's growth forecast for the current fiscal by one percentage point, due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative. In an update of its flagship publication the World Economic Outlook, the IMF said India is likely to grow by 6.6 per cent only in FY17, down from 7.6 per cent estimated earlier and marginally behind China that is pegged to grow at 6.7 per cent in 2016. However, investors got some comfort with report that the Goods and Services Tax (GST) Council on Monday broke a deadlock over issues of administrative control over assessees and broadly agreed to roll out the GST from July 1, instead of the earlier deadline of April 1. Under the proposed tax regime, 90% of all assessees with a turnover of Rs 1.5 crore or less will be assessed for scrutiny and audit by state authorities, the remaining 10% by the Centre. The Council also resolved a logjam over the right to tax economic activities within 12 nautical miles from India’s coasts.

On the global front, Asian markets were trading mostly higher on Tuesday, though investors remained cautious ahead of UK Prime Minister Theresa May's speech on her government's Brexit plans later today and amid growing uncertainty over US policy ahead of President-elect Donald Trump's inauguration later this week. Japan's Nikkei share average skidded to its lowest levels since early December, undermined by a resurgent yen as well as profit-taking. Meanwhile, European stock markets closed on a negative note on Monday, with FTSE closed lower by 10 points and CAC lower by 40 points.

Back home, stocks from Capital Goods, FMCG and IT counters were supporting the markets, while those from Metal, Oil & Gas and Power counters were adding to the underlying cautious undertone. In scrip specific development, Eastern Treads surged after the company won the tender for supplying the tyre retreading materials to Karnataka State Road Transport Corporation & Rajasthan State Road Transport Corporation. Furthermore, Sybly Industries rose after the company secured its first recycled fiber export order worth 1.02 million euro for its green fiber polyester yarn from Barcelona, in Spain.

The market breadth remained optimistic as there were 1275 shares on the gaining side against 1043 shares on the losing side, while 155 shares remained unchanged.

The BSE Sensex is currently trading at 27248.65, down by 39.52 points or 0.14% after trading in a range of 27231.07 and 27381.43. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index up by 0.43%.

The gaining sectoral indices on the BSE were Capital Goods up by 0.64%, FMCG up by 0.61%, IT up by 0.56%, Realty up by 0.53%and TECK up by 0.40%, while Metal down by 0.93%, Oil & Gas down by 0.78%, Power down by 0.15%, PSU down by 0.13% and Auto down by 0.10% were the losing indices on BSE sectoral front.

The top gainers on the Sensex were Hindustan Unilever up by 1.78%, Asian Paints up by 1.21%, Larsen & Toubro up by 1.12%, Axis Bank up by 1.06% and Sun Pharma up by 0.74%. On the flip side, Reliance Industries down by 2.85%, Adani Ports & SEZ down by 1.57%, Tata Steel down by 1.11%, Lupin down by 1.07% and Coal India down by 0.97% were the top losers.

Meanwhile, days after World Bank slashed India's growth estimates, the International Monetary Fund (IMF), which so far had maintained that India is a bright spot against the gloomy global economic outlook, too has cut India’s economic growth estimate for 2016-17 to 6.6% from its earlier projection of 7.6%, due to the impact of the government's move of demonetization of high value currency notes in early November.

The IMF in its ‘World Economic Outlook update’ stated that India’s growth forecast for the current (2016-17) and next fiscal year were trimmed by one percentage point and 0.4 percentage point, respectively, primarily due to temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative. IMF expects the economy to recover and grow by 7.2% in 2017-18, still slower than the previous estimate of 7.6%. In 2018-19, it expects the Indian economy to grow by 7.7%.

The IMF revised upwards China's estimate based on expectations of a stimulus. Near-term growth prospects were revised up for China, due to expected policy stimulus, but were revised down for a number of other large economies. China is projected to grow by 6.5% in 2017 and 6% in 2018, slower than India's growth in both years.

Earlier, the World Bank had lowered the India's GDP growth estimate for this fiscal to 7 percent, from its earlier estimate of 7.6 percent made in June last year, saying that immediate withdrawal of a large volume of currency in circulation and subsequent replacement with new notes announced by the government in November contributed to slowing growth in 2016.

The CNX Nifty is currently trading at 8400.05, down by 12.75 points or 0.15% after trading in a range of 8395.20 and 8440.90. There were 21 stocks advancing against 28 stocks declining on the index, while 2 stocks remained unchanged.

The top gainers on Nifty were Hindustan Unilever up by 1.80%, Asian Paints up by 1.07%, Axis Bank up by 1.00%, Tech Mahindra up by 0.93% and Zee Entertainment up by 0.82%. On the flip side, Reliance Industries down by 2.82%, Adani Ports & SEZ down by 1.73%, Lupin down by 1.18%, Coal India down by 1.16% and Hindalco down by 1.01% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.3%, Jakarta Composite rose 0.22%, KOSPI Index gained 0.32%, Taiwan Weighted added 0.67% and Hang Seng was up by 0.56%. On the flip side, Nikkei 225 decreased 1.3% and Shanghai Composite was down by 0.34%.