Benchmarks trade lower in early deals ahead of Economic Survey

Indian equity benchmarks have made a weak start and are trading with a cut of over one third of a percent in early deals on Tuesday, with frontline gauges breaching their crucial 27,800 (Sensex) and 8,600 (Nifty) levels, as traders remained on sidelines ahead of Economic Survey 2017-18 to be unveiled later today. The survey authored by Chief Economic Adviser Arvind Subramanian may also talk about fiscal deficit targets, cash transaction tax on withdrawals and universal income tax. Traders also remained concerned with the CII - IBA Financial Conditions Index for Q4 (January-March) FY2016-17 recording a drop below the 50 mark owing to expectation of banks and financial institutions of deterioration in the overall financial conditions in the economy.

Global cues too remained sluggish with most of the Asian counters trading lower at this point of time, following the negative lead overnight from Wall Street as worries about the economic impact of US President Donald Trump's immigration policies continued to weigh on markets. The US markets ended mostly lower in last session, with major averages giving up some gains on profit taking. Back home, the market breadth indicating the overall health of the market was weak, with 805 shares gaining and 1,115 shares declining, while a total of 131 shares were unchanged.

The BSE Sensex is currently trading at 27756.62, down by 92.94 points or 0.33% after trading in a range of 27695.23 and 27867.92. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.16%, while Small cap index was down by 0.07%.

The few gaining sectoral indices on the BSE were Power up by 0.93%, FMCG up by 0.20% and Metal was up by 0.15%, while IT down by 1.18%, TECK down by 1.00%, Auto down by 0.64%, Consumer Durables down by 0.39% and Bankex was down by 0.31% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.91%, Tata Steel up by 1.53%, Power Grid up by 1.46%, Hindustan Unilever up by 0.66% and NTPC was up by 0.49%. On the flip side, Coal India down by 2.72%, GAIL India down by 2.49%, TCS down by 1.44%, Tata Motors down by 1.35% and Infosys was down by 1.30% were the top losers.

Meanwhile, Federation of Indian Chambers of Commerce and Industry (Ficci) in its latest round of Economic Outlook Survey has said that Indian economy will grow 6.8 percent for the year 2016-17 due to a slowdown in the services and infrastructure sectors post demonetisation. It added that this is 0.5 percentage points lower than the estimate of 7.3 percent put across in the last round. It also said that the Reserve Bank of India (RBI) is likely to maintain status quo in the upcoming monetary policy meet and will cut rates in the first half of fiscal year 2017-18.

Ficci survey projected the agriculture sector to witness an uptick in the FY17 on the back of good monsoon leading to support in agricultural production. However, it expects the growth in industry and services to remain moderate. It also expects the industry and services sector to grow by 5.7 percent and 8.5 percent, respectively in 2016-17. The economists in the survey have forecast the government's latest demonetisation decision to cause a slowdown in the industrial and services sector growth.

The survey has projected the country's GDP growth to recover once the remonetisation phase is complete and currency is back into circulation. According to the survey participants, the recovery in the country's investments and overall economic growth will be impacted by the government spending and private consumption which has been hit due to its demonetisation move. They believe that the government will continue the focus on additional spending especially in infrastructure projects to give a push to the economy.

On the RBI's interest rate cut in the upcoming monetary policy on February 8, a majority of participants expected the central bank to maintain status quo with regard to repo rate on account of domestic and global factors. Global happenings like US president Donald Trump announcement of policies will be critical, they said. However, economists have anticipated the accommodative stance of the RBI to continue with a probable rate cut of 25 basis points in first half of the financial year 2017-18.

The CNX Nifty is currently trading at 8599.10, down by 33.65 points or 0.39% after trading in a range of 8579.70 and 8631.75. There were 20 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 7.63%, Tata Power up by 1.99%, ONGC up by 1.66%, Tata Steel up by 1.55% and Power Grid was up by 1.22%. On the flip side, Bharti Infratel down by 6.21%, Grasim Industries down by 4.08%, Coal India down by 2.97%, GAIL India down by 2.76% and Infosys was down by 1.42% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 297.89 points or 1.54% to 19,070.96, KOSPI Index shed 10.27 points or 0.49% to 2,073.32 and FTSE Bursa Malaysia KLCI was down by 9.93 points or 0.59% to 1,676.43. On the flip side, Jakarta Composite was up by 2.89 points or 0.05% to 5,305.55.