Benchmarks pare losses but continues to trade in red

Indian equities pared most of their initial losses but continued to trade marginally in red in the afternoon session on account of selling in frontline counters. Investors also digested Union Budget and awaited RBI policy due next week and more corporate earnings. Weak trend in Asian markets coupled with the losses in Metal, Auto, Capital Goods and banking stocks were putting pressure. However, losses remained capped as some support came with Niti Aayog vice-chairman Arvind Panagariya’s statement that the economic growth in the next fiscal year would be in the range of 7-7.5 percent. In scrip specific development, Muthoot Finance was up by over four and half percent on plans to raise up to Rs 2000 crore by issuing non-convertible debentures (NCDs) on private placement basis in one or more tranches. 

On the global front, Asian markets were trading mostly in red and the dollar lost some steam on Thursday after the US Fed kept its key lending rate on hold as expected at its latest policy meeting. Back home, the BSE Sensex is currently trading at 28115.60, down by 26.04 points or 0.09% after trading in a range of 28070.81 and 28194.00. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.50%, while Small cap index was up by 0.49%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.29%, TECK up by 1.19%, IT up by 1.11%, Oil & Gas up by 0.83% and Realty up by 0.59%, while Metal down by 1.01%, Auto down by 0.98%, Capital Goods down by 0.64% and Bankex down by 0.23% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.96%, NTPC up by 2.14%, Dr. Reddys Lab up by 1.87%, Infosys up by 1.81% and Axis Bank up by 1.73%. On the flip side, Mahindra & Mahindra down by 2.53%, Tata Motors down by 1.98%, HDFC down by 1.69%, Bajaj Auto down by 1.23% and Tata Steel down by 1.19% were the top losers.

Meanwhile, presenting the Union Budget 2017-18 in Parliament, Finance Minister Arun Jaitley has expressed his confidence that slowdown in economic activity on account of demonetisation was only temporary and its effect would not spill over to the next financial year. He also said that like all reforms, this measure is obviously disruptive, as it seeks to change the retrograde status quo.

Describing demonetisation as bold and decisive measure, the Minister said that the move has a strong potential to generate long term benefits in terms of reduced corruption, greater digitisation of economy, increased flow of financial savings and greater formalisation of economy. He also said that it would eventually lead to higher GDP growth and tax revenues.

Finance Minister has said that there is early evidence of an increased capacity of banks to lend at reduced interest rates and a huge shift towards digitisation among all sections of society. He noted that the surplus liquidity in the banking system, created by demonetisation, will lower borrowing costs and increase the access to credit and added that this will boost economic activity, with multiplier effects. He also said that tax evasion had become a way of life and had bred a parallel economy, which demonetisation aimed to change.

The CNX Nifty is currently trading at 8701.05, down by 15.35 points or 0.18% after trading in a range of 8685.80 and 8727.00. There were 19 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 4.38%, Bharti Airtel up by 2.93%, Aurobindo Pharma up by 2.24%, NTPC up by 1.84% and Infosys up by 1.77%. On the flip side, Hindalco down by 3.12%, Mahindra & Mahindra down by 2.90%, Indusind Bank down by 2.56%, Bosch down by 2.40% and Tata Motors down by 2.14% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 233.5 points or 1.22% to 18,914.58, Hang Seng declined 154.49 points or 0.66% to 23,163.90, Taiwan Weighted shed 18.98 points or 0.2% to 9,428.97 and KOSPI Index was down by 9.47 points or 0.46% to 2,071.01.

On the flip side, FTSE Bursa Malaysia KLCI increased 5.28 points or 0.32% to 1,676.82 and Jakarta Composite rose 18.66 points or 0.35% to 5,345.82.