Benchmarks continue weak trade in late morning session

Indian equity benchmarks continued their weak trade in late morning session on account of selling in frontline blue chip counters. Investors turned cautious ahead of the exit poll results due tomorrow for the ongoing assembly elections. Concerns have also grown over a hike in interest rates by the US Federal Reserve next week. Traders took cautious approach with the Organization for Economic Cooperation and Development (OECD) in its Interim Economic Outlook report highlighted that India, where the government implemented a drastic measure of currency demonetization in November, was the only one to see its growth forecast for the year reduced. India’s growth projection for the financial year ending on March 31 was lowered to 7.3 percent. The outlook for the fiscal year 2018 was retained at 7.7 percent. Yet, the Indian economy would continue to remain the fastest growing in the entire group in both years. The downside was capped taking support from Prime Minister Narendra Modi’s statement that his government has been able to tame inflation which had gone out of control before 2014 and no political party could raise the issue during the polls in five states. PM cited examples of how different organizations around the world including the World Bank, IMF and others have appreciated the demonetization move. Traders were seen piling position in Healthcare and Bankex stocks, while selling was witnessed in Metal, Oil & Gas and Energy sector stocks. In scrip specific development, MTNL was trading firm amid report suggesting a proposal seeking a merger of MTNL with BSNL is on the cards. The top officials at the telecom department are once again brainstorming on various options before the two loss-making, state-owned entities. Jaiprakash Power Ventures was trading in green amid reports that Brookfield Asset Management, the world’s second-biggest alternative assets manager, is in talks with lenders of the debt-laden company to acquire the firm’s three power plants.

On the global front, Asian shares were trading mostly in green, as strong China trade data bolstered bets of a recovering global economy, though gains were capped by caution ahead of a widely expected US interest rate hike next week. Japan’s economy grew more than earlier estimated in the fourth quarter as capital expenditure grew at its fastest in almost three years, welcome news for policymakers as they begin to discuss how to wind down years of massive stimulus. 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 983:1271, while 130 scrips remained unchanged.

The BSE Sensex is currently trading at 28920.60, down by 78.96 points or 0.27% after trading in a range of 28908.89 and 29022.32. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.31%, while Small cap index was down by 0.06%.

The only gainers on the BSE were Healthcare up by 0.15% and Bankex up by 0.09%, while Metal down by 1.27%, Oil & Gas down by 1.08%, Energy down by 0.88%, IT down by 0.71% and Realty down by 0.71% were the losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.16%, HDFC up by 0.69%, NTPC up by 0.41%, Larsen & Toubro up by 0.36% and Cipla up by 0.28%.

On the flip side, Adani Ports & Special Economic zone down by 1.07%, Infosys down by 1.05%, Axis Bank down by 0.95%, Hindustan Unilever down by 0.90% and Tata Motors down by 0.88% were the top losers.

Meanwhile, global ratings agency, Fitch Ratings in its latest report has raised the forecast for India’s GDP growth in the current financial year 2016-17 to 7.1% from earlier 6.9%, after the government’s official data showed there was hardly any impact on the economy from demonetisation of high value currency notes. The projection of growth for this fiscal is in line with the estimates of CSO and global think-tank OECD. It also said that the economy will grow 7.7% in the next two financial years and estimated retail price inflation to rise to 4.6 per cent in 2017-18 and 5% in 2018-19, from 3.4% in the current year.

Though, the ratings agency expressed surprise at the official Indian statistician's latest projection of 7% GDP growth in the third quarter ended December, saying it contradicted data on real services activity hit by demonetisation. It further said that this number looks somewhat surprising as real activity data released since demonetisation pointed to weak consumption and services activity because these transactions are cash-intensive. By contrast, official data suggest that private consumption was strong in October-December (though services output growth moderated quite substantially). It also said that one reason for this discrepancy could be the inability of the official data to capture the negative effect of demonetisation on the informal sector.

Forecasting robust growth rates for India in the next two fiscal, Fitch said that gradual implementation of the structural reform agenda is expected to contribute to higher growth, as will higher real disposable income, supported by an almost 24 per cent hike in civil servants' wages at the state level. It said macroeconomic policy support to growth may gradually fade. It added that there may still be some positive impact from the previous accommodative monetary policy stance, but the Reserve Bank of India signalled in its February meeting that its interest rate easing cycle had come to an end.

The CNX Nifty is currently trading at 8942.00, down by 4.90 points or 0.05% after trading in a range of 8939.85 and 8957.05. There were 22 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 1.71%, Yes Bank up by 1.70%, Power Grid up by 1.49%, ACC up by 1.34% and Aurobindo Pharma up by 0.87%.

On the flip side, BPCL down by 1.57%, Idea Cellular down by 1.52%, Hindalco down by 1.22%, HCL Technologies down by 1.05% and Infosys down by 0.89% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 0.86 points or 0.04% to 2,094.91, Shanghai Composite increased 1.05 points or 0.03% to 3,243.45, Taiwan Weighted increased 23.15 points or 0.24% to 9,761.22 and Hang Seng increased 95.21 points or 0.4% to 23,776.28.

On the other hand, Nikkei 225 decreased 111.9 points or 0.58% to 19,232.25, Jakarta Composite decreased 2.38 points or 0.04% to 5,400.23 and FTSE Bursa Malaysia KLCI decreased 1.96 points or 0.11% to 1,726.70.