Benchmarks pare some losses in late afternoon session

Indian benchmarks continued to trade lower in late afternoon session, though recovered some losses from day's low as Finance Minister Arun Jaitley tables Economic Survey for 2016-17. However, traders remained on sidelines ahead of Union Budget to be announced tomorrow. Sentiments also remained downbeat with Fitch Ratings’ statement that demonetisation is likely to push back the recovery in Indian banks' asset quality, given the disruptive impact that cash shortages have had on the country's large informal economy. Selling in IT sector too dampened sentiments, as United States President Donald Trump government has introduced a bill in the US Congress that attempts to reform the H1-B visa process. The bill proposes to more than double the minimum wage for visa holders from $60,000 to $130,000.

On the global front, European markets were trading in green as a rally in companies such as British online supermarket Ocado on strong results was offset by weaker firms like UPM-Kymmene and Givaudan following their updates. Asian markets were trading in red as stringent curbs on travel to the United States ordered by President Donald Trump brought home to investors that he is serious about carrying out his controversial campaign pledges. Back home, in scrip specific development, Kansai Nerolac Paints was trading in green after the company received an approval for setting up a paint manufacturing unit at Achutapuram, Visakhapatnam District in Andhra Pradesh.

The BSE Sensex is currently trading at 27771.99, down by 77.57 points or 0.28% after trading in a range of 27633.55 and 27867.92. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.56%, while Small cap index was down by 0.64%.

The few gaining sectoral indices on the BSE were FMCG up by 0.20% and Capital Goods up by 0.07%, while IT down by 2.82%, TECK down by 2.27%, Realty down by 0.80%, PSU down by 0.66% and Consumer Durables down by 0.60% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.79%, ONGC up by 1.36%, Power Grid up by 0.98%, ITC up by 0.96% and Dr. Reddy’s Lab up by 0.58%. On the flip side, TCS down by 4.12%, Wipro down by 2.24%, Infosys down by 2.05%, Adani Ports & Special economic zone down by 1.96% and GAIL India down by 1.82% were the top losers.

Meanwhile, the CII-IBA Financial Conditions Index based on a survey of leading banks and financial institutions on their expectations of key financial and economic variables determining the financial conditions in the Indian economy, has shown that financial conditions of the Indian economy deteriorated in the fourth quarter. CII - IBA financial Conditions Index for the fourth quarter of FY2016-17 fell below the 50 mark to 48. This shows slowdown in the overall financial conditions in the Indian economy reflecting from expectation of banks and financial institutions that worsening of external financial linkages and domestic economic activity will bring deterioration in economy.

As per the survey signals that the majority of 43 respondents, including public sector banks, private sector banks, foreign banks and non-banking finance companies, have indicated a slowdown in the overall economic conditions of the country. The CII-IBA survey has noted that all the sub-indices witnessed a relative decline which has led deterioration in the Financial Conditions Index. Among the sub-indices, the Economic Activity Index has recorded the lowest level and witnessed maximum decline with expectation of significant deterioration. On the other hand, the Cost of Funds Index and Funding Liquidity Index indicate improvement, reflecting divergence in performance vis-à-vis other sub-indices.

Considering the significant shift in the outlook for financial conditions in the current macroeconomic scenario, CII-IBA has stated that the impact of the contractionary demand shock triggered by the note ban will eventually radiate from cash-intensive activities to virtually every sector of the economy. Further they added that note ban has hit trade and consumption hard and it will impact on the country’s growth and output during the current fiscal. However, the move to a cashless economy will eventually improve savings in financial assets, which will benefit intermediaries such as banks, NBFCs, microfinance and digital money operators.

The CNX Nifty is currently trading at 8595.05, down by 37.70 points or 0.44% after trading in a range of 8555.15 and 8631.75. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 17.91%, Bajaj Auto up by 1.72% and ONGC up by 1.24%, Bharti Airtel up by 1.03% and ITC up by 0.90%. On the flip side, Bharti Infratel down by 13.51%, Grasim Industries down by 4.35%, TCS down by 4.07%, Tech Mahindra down by 3.93% and HCL Tech down by 2.52% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 327.51 points or 1.69% to 19,041.34, KOSPI Index decreased 16.02 points or 0.77% to 2,067.57 and FTSE Bursa Malaysia KLCI decreased 6.04 points or 0.36% to 1,680.32. On the flip side, Jakarta Composite increased 11.2 points or 0.21% to 5,313.86.

European markets were trading mostly in green; France’s CAC increased 2.78 points or 0.06% to 4,787.42 and UK’s FTSE 100 increased 6.26 points or 0.09% to 7,124.74. On the flip side, Germany’s DAX decreased 0.13 points or 0% to 11,681.76.