Benchmarks trade slightly in red as Janet Yellen hints more rate hikes

Indian equity benchmarks have made a sluggish start and are trading slightly in red in early deals on Wednesday with fear of US Fed’s imminent rate hike in March. Traders also remained on sidelines ahead of the 10th meeting of the all-powerful GST Council this weekend, where a critical anti-profiteering clause in the draft Goods and Services Tax law to ensure that the benefit of lower taxes gets shared with consumers is likely to be finalized. However, losses remained capped with India Ratings and Research (Ind-Ra) latest report that the Indian economy is likely to grow by 7.4 percent in the next fiscal year, however it has revised down GDP growth estimate for 2016-17 to 6.8 percent from 7.9 percent.

On the global front, Asian markets were trading mostly in green at this point of time, led by the Japanese market that surged on weakness in yen after Janet Yellen said the Federal Reserve doesn’t need to wait for the Trump’s administration’s plans on fiscal stimulus to hike rates. The US markets continuing their bull run reached new record highs in the last session.

Back home, sentiments remained dampened after Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 6.45 crore, while Domestic Institutional Investors (DIIs) also sold shares worth a net Rs 3.20 crore on February 14, 2017. In scrip specific developments, Tata Motors trade lower by over 7.5% after its net consolidated profit fell 96% year-on-year to Rs 112 crore, impacted by big loss in domestic business and operational weakness in JLR. MTNL edged lower by around 3% on widening of its standalone net loss at Rs 819.96 crore, surpassing its total revenue, during the three-month period ended December 31, hit by increase in finance cost.

The BSE Sensex is currently trading at 28320.10, down by 19.21 points or 0.07% after trading in a range of 28269.92 and 28382.32. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.03%, while Small cap index was down by 0.18%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.73%, Metal up by 0.72%, IT up by 0.50%, Bankex up by 0.36% and PSU up by 0.36%, while Auto down by 1.53% and Realty down by 1.47% were the only losing indices on BSE.

The top gainers on the Sensex were Adani Ports up by 1.79%, Axis Bank up by 1.12%, Power Grid up by 0.77%, ONGC up by 0.74% and Infosys was up by 0.70%. On the flip side, Tata Motors down by 7.64%, Sun Pharma down by 2.81%, Hero MotoCorp down by 1.05%, Dr. Reddy’s Lab down by 0.69% and Bharti Airtel was down by 0.64% were the top losers.

Meanwhile, rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that the India’s gross domestic product (GDP) is likely to grow by 7.4 percent year-on-year in FY18. This is on the upper end of the 6.75 to 7.5 percent band estimated in the Economic Survey. The rating agency however revised down GDP growth forecast for FY17 to 6.8 percent from 7.9 percent estimated earlier. This downgrade is even lower than Central Statistical Organisation's advanced estimate of 7.1 percent.

Ind-Ra has said that the gross value added (GVA) of the three production sectors including agriculture, industry and services would grow at 3 percent, 6.1 percent and 9.1 percent year-on-year respectively in 2017-18, backed by consumption demand and government spending. However, private final consumption expenditure is expected to grow at 8.9 percent, the government final consumption expenditure is expected to clock 9 percent growth in the next financial year. For current account deficit it said that it is likely to come at 1 percent of GDP in FY18 as against 0.9 percent in FY17. It also said that this will help the rupee trade at an average $69.18 in FY18.

Talking about the global scenario, the report said that imports will get hit because of rising protectionism, adding that US President Donald Trump’s trade agenda and the current direction of European politics, both have the potential to ‘create a global economic and market turmoil’ in 2017. As against the popular perception, Ind-Ra said the main setback to investment growth came from the negative 2.2 percent growth in the gross fixed capital formation (GFCF) of household sector. It expects GFCF to grow at 4.9 percent in 2017-18.

The CNX Nifty is currently trading at 8788.70, down by 3.60 points or 0.04% after trading in a range of 8775.20 and 8807.90. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 1.79%, Zee Entertainment up by 1.26%, Axis Bank up by 1.19%, Hindalco up by 1.07% and Ultratech Cement was up by 1.01%. On the flip side, Tata Motors down by 6.86%, Tata Motors - DVR down by 6.63%, Sun Pharma down by 2.75%, Idea Cellular down by 1.41% and BHEL was down by 1.30% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 8.19 points or 0.39% to 2,082.76, Shanghai Composite gained 10.07 points or 0.31% to 3,228.00, Taiwan Weighted added 68.98 points or 0.71% to 9,787.76, Nikkei 225 surged 197.77 points or 1.03% to 19,436.75 and Hang Seng was up by 299.56 points or 1.26% to 24,002.57.

On the flip side, Jakarta Composite decreased 28.88 points or 0.53% to 5,380.67 and FTSE Bursa Malaysia KLCI was down by 1.02 points or 0.06% to 1,707.88.