Benchmarks extend losses in late morning session

Indian equity benchmarks extended their losses and hovering near lowest point of the day in late morning session on account of selling in frontline blue chip counters. Investors remained on sidelines ahead of key exit poll data for assembly elections in five states. There was some cautiousness in the markets with Deputy Governor of the Reserve Bank of India’s (RBI) statement that the impact of demonetization on the informal sector is not fully captured in the GDP data and the effects of demonetization is expected to spill over to certain segments of the economy in this quarter. However, he also said that the impact of the notes ban would only be temporary and would help in bringing informal sector into the mainstream economy. Some selling also crept in after a foreign brokerage firm reported that companies are reluctant to increase hiring, and future activity expectations have fallen. The report highlighted that even as both service and manufacturing PMIs have posted better numbers than previous months, firms are reluctant to increase hiring points to a modest ‘U’ shaped recovery with the Reserve Bank likely to hold on to rates in the near future. Cautiousness also prevailed on report that India improved its ease of doing business ranking last year -- moving up from 131 to 130 in a list of 190 countries but still ranks among the worst performers on other key parameters. In most indicators, India ranked low, coming closest to sub-Saharan African countries.

Traders were seen piling position in Power, Consumer Durables and Utilities stocks, while selling was witnessed in Metal, Healthcare and Basic Materials sector stocks. In scrip specific development, PNC Infratech was trading in green as the company has been declared the L1 (lowest) bidder for NHAI project of six laning Chitradurga - Davanagere including Chitradurga bypass, design chainage km 0.000 to km 20.700 and Km 208.000 to km 260.000 of NH 48 (Old NH-4) in the state of Karnataka under NHDP V, to be executed on hybrid annuity mode for a bid project cost of Rs 1,434 crore. Sangam Advisors was trading in green on entering into an agreement with Maharashtra Seamless to supply 1mw power for 25 years.

On the global front, Asian shares were trading mostly in green, with sentiment slightly downbeat on growing expectations of a Fed rate hike this month. Bank of Japan board member Takako Masai said large swings in exchange rates can be a concern for Japan’s economy as it could hurt business sentiment. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,950 and 29,000 levels respectively. The market breadth on BSE was negative in the ratio of 972:1242, while 138 scrips remained unchanged.

The BSE Sensex is currently trading at 28983.02, down by 65.17 points or 0.22% after trading in a range of 28979.09 and 29098.17. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.04%, while Small cap index was down by 0.10%.

The gaining sectoral indices on the BSE were Power up by 0.50%, Consumer Durables up by 0.44%, Utilities up by 0.31%, Industrials up by 0.28% and Oil & Gas up by 0.26%, while Metal down by 1.44%, Healthcare down by 0.54%, Basic Materials down by 0.51%, IT down by 0.49% and FMCG down by 0.45% were the losing indices on BSE.

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 0.88%, TCS up by 0.72%, GAIL India up by 0.60%, ONGC up by 0.59% and Tata Motors up by 0.58%.

On the flip side, Tata Steel down by 1.87%, Infosys down by 1.73%, Axis Bank down by 1.07%, Lupin down by 0.86% and Sun Pharma down by 0.80% were the top losers.

Meanwhile, Reserve Bank of India Deputy Governor Viral V Acharya has said that the impact of note ban on country’s gross domestic product (GDP) growth may be seen in the fourth quarter of the current financial year in some segments. Though, he also said that remonetisation process is taking place at a very fast pace and the process will normalize in the next two to three months.

The newly appointed Deputy Governor has said that the cash shortage was like a liquidity shock and unless it has led to a wealth destruction and he also expects that the effect to be quite temporary, though it has been hard on some sectors. He further said that there may be a couple of sectors, like 2-wheeler sales, where there is slightly slower rebound. He further said that the impact of demonetization move would help in bringing informal sector into the mainstream economy. Talking about GDP estimates, the RBI Deputy Governor has said that their GDP estimates were reasonably close to the Central Statistics Organization (CSO) numbers, despite the fact that the drivers could have been slightly different.

Acharya further speaking about asset quality review (AQR) has said that it is on track and the RBI had set a deadline of March 2017 for completion of AQR exercise for the public sector bank. He also pointed out that it has had a debilitating impact on banks' numbers and their stocks and added that the move resulted in a spike in bad assets with lenders recognizing over Rs 1 lakh crore of bad assets in the December quarter alone.

The CNX Nifty is currently trading at 8938.50, down by 24.95 points or 0.28% after trading in a range of 8935.80 and 8977.85. There were 19 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.17%, BHEL up by 0.84%, Tata Power up by 0.79%, TCS up by 0.65% and Adani Ports & Special Economic Zone up by 0.63%.

On the flip side, Hindalco down by 2.88%, Tata Steel down by 1.87%, Infosys down by 1.73%, Yes Bank down by 1.25% and Axis Bank down by 1.17% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.36 points or 0.08% to 1,728.72, KOSPI Index increased 13.41 points or 0.64% to 2,094.77, Taiwan Weighted increased 28.96 points or 0.3% to 9,711.59 and Hang Seng increased 87.09 points or 0.37% to 23,683.37.

On the other hand, Nikkei 225 decreased 31.57 points or 0.16% to 19,347.57, Jakarta Composite decreased 13.77 points or 0.25% to 5,396.04 and Shanghai Composite decreased 3.16 points or 0.1% to 3,230.71.