Sensex, Nifty trade in red in late morning session

Indian equity benchmarks erased gains and started trading in red in the late morning session on account of selling in frontline blue chip counters. Investors awaited RBI monetary policy due next week and more corporate earnings after digesting Union Budget. Aban Offshore, Adlabs Entertainment, Indian Hotels, Torrent Pharma and TTK Healthcare will announce their financial results today for the quarter ended December 31, 2016. The Indian rupee hit nearly a three-month high in the opening trade against the US dollar ahead of the US jobs data due later on Friday. Meanwhile, Indian IT sector leaders will meet both US lawmakers and officials from US President Donald Trump’s administration later this month to lobby against any major changes to visa regulations that could hurt the country’s $150 billion industry. Finance minister Arun Jaitley’s announcement in the budget that the government intends to simplify labour laws hasn’t gone down well with the industry, which is apprehensive about action on the ground in the absence of any deadline given to rationalize the 44 labour laws. Work on the four labour codes began immediately after the BJP-led NDA government came to power in May 2014 and at least two codes, the labour code on wages and the labour code onindustrial relations, are pending for Cabinet’s approval for quite some time. Separately, the downturn in service sector activity across India softened during the opening month of 2017, with the slowdown reflecting a weaker contraction in new business inflows, says Nikkei IHS Markit in its report. The firm says rising from 46.8 at the end of 2016 to 48.7 in January, the seasonally adjusted headline Nikkei India Services Business Activity Index pointed to the slowest fall in output in the current three-month sequence of reduction.

Traders were seen piling position in PSU, Bankex and TECK stocks, while selling was witnessed in Consumer Durables, Auto and IT sector stocks. In scrip specific development, Sun TV Network was trading firm after a special court on Thursday discharged former Telecom Minister Dayanidhi Maran, his brother Kalanithi Maran and others in the Aircel-Maxis deal cases lodged by CBI and the Enforcement Directorate (ED). Country’s oldest stock exchange BSE listed on the National Stock Exchange, up 35 percent over its issue price of Rs 806. BSE (erstwhile Bombay Stock Exchange), which was the first share sale by a domestic stock exchange, recently concluded its Rs 1,243-crore initial public offering that was opened for bidding on January 23-25.

On the global front, Asian shares were trading mostly in green, as investors await the outcome of a key US monthly jobs report that will set the tone for the Federal Reserve’s policy outlook and as China’s markets reopen after a week-long break. A series of diplomatic snafus by the Trump administration are worrying some in the market. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,750 and 28,300 levels respectively. The market breadth on BSE was positive in the ratio of 1404:804, while 102 scrips remained unchanged.

The BSE Sensex is currently trading at 28205.85, down by 20.76 points or 0.07% after trading in a range of 28142.23 and 28280.58. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.93%, while Small cap index was up by 0.80%.

The top gaining sectoral indices on the BSE were PSU up by 0.65%, Bankex up by 0.37%, TECK up by 0.33%, Power up by 0.23% and Realty up by 0.17%, while Consumer Durables down by 0.73%, Auto down by 0.37%, IT down by 0.15%, Capital Goods down by 0.08% and FMCG down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 2.11%, SBI up by 1.49%, Adani Ports & Special Economic Zone up by 1.12%, ONGC up by 0.82% and Dr. Reddy’s Lab up by 0.74%.

On the flip side, ICICI Bank down by 1.35%, Tata Motors down by 0.86%, Infosys down by 0.86%, Larsen & Toubro down by 0.83% and Power Grid down by 0.44% were the top losers.

Meanwhile, reacting to Chief Economic Advisor Arvind Subramanian’s statement questioning the methodologies used by global rating agencies and slamming them for following inconsistent standards, the global ratings agency, Standard & Poor's (S&P) has claimed that its rating methodologies are transparent and consistent across the globe. The rating agency has said that they apply the same methodology consistently for sovereigns across the globe and India is no exception. It added their sovereign rating methodologies are transparent and are freely available on their website.

Arvind Subramanian had earlier said that global rating agencies have inconsistent and poor standards while rating India vis-a-vis China. He added that agencies have not taken into account government’s reforms initiatives such as FDI liberalisation, bankruptcy code, monetary policy framework agreement, GST and Aadhaar Bill, which is a ‘poor’ reflection on their credibility. He had said that S&P has rated China six grades above India and since 2010 it has held China's ratings steady despite economic growth slowing to 6.5 percent from 10 percent. In contrast, India's has moved in the opposite direction and growth has increased. S&P has a ‘BBB-’ rating on India with a stable outlook, while it has ‘AA-’ rating on China with a negative outlook. S&P had in November ruled out an upgrade in the country's ratings for some considerable period, citing low per capita GDP and relatively high fiscal deficit. The government debt to GDP ratio stood at 68.5 percent.

S&P has said that mostly, they spell out the broad mix of which factors that they look at in assessing sovereign credit, including in India's case the balance between fiscal consolidation and stimulating growth. On S&P’s rationale for higher rating on China, S&P director for sovereign ratings Kyran Curry said ‘If I can directly touch upon the comparison between India's ‘BBB-’ rating and China's ‘AA-’ rating with a negative outlook, I think this comparison is very useful but it is worth noting that China has a GDP per capita about five times greater than India and China's debt stock is only about 30 percent of GDP’. He added that it is also worth noting that because of China's much lower debt stock, its debt servicing cost is only 3 percent of revenue compared to 21 percent for India. So, these are the factors that underpin China's higher rating.

The CNX Nifty is currently trading at 8726.50, down by 7.75 points or 0.09% after trading in a range of 8709.65 and 8748.25. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.26%, Bank of Baroda up by 2.79%, Cipla up by 2.05%, IndusInd Bank up by 1.87% and Tech Mahindra up by 1.39%.

On the flip side, BPCL down by 1.59%, Zee Entertainment down by 1.42%, ICICI Bank down by 1.42%, Eicher Motors down by 1.38% and ACC down by 1.18% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 6.17 points or 0.37% to 1,679.65, Jakarta Composite increased 8.67 points or 0.16% to 5,362.39, Taiwan Weighted increased 19.05 points or 0.2% to 9,448.02 and Nikkei 225 increased 21.78 points or 0.12% to 18,936.36.

On the other hand, Hang Seng decreased 110.61 points or 0.48% to 23,073.91, Shanghai Composite decreased 17.43 points or 0.55% to 3,141.74 and KOSPI Index decreased 1.11 points or 0.05% to 2,069.90.