Markets pare some losses; continue to trade in negative zone

Indian equity indices pared some of their losses but continued to trade in a negative zone in late afternoon session amid mixed global cues. Investors remained cautious ahead of the assembly elections results. Sentiments also remained subdued with a private report stated that Consumer price inflation is likely to rise in February for the first time since demonetisation and this could prompt the Reserve Bank of India (RBI) to hike rates much sooner than most expect. However, downside remained capped with 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. Furthermore, domestic credit rating agency, ICRA stated that the compensation law approved by the government for revenue losses related to the transition to the goods and services tax (GST) system will bring certainty to state budgeting.

On the global front, European markets were trading in red as risk appetite waned ahead of Thursday's ECB meeting, the U.S. jobs report for February due on Friday and the Federal Reserve's policy meeting on March 14-15, with a rate increase appearing certain. Asian markets were trading mixed after China released mixed trade figures. While imports jumped 44.7 percent in yuan terms to post their biggest gain in at least two years, exports missed estimates to rise 4.2 percent in February from a year earlier, leaving a trade deficit of 60.4 billion yuan ($8.8 billion), the first yuan-denominated deficit in three years.

Back home, in scrip specific development, Unichem Laboratories were trading higher after the company received ANDA approval from the United States Food and Drug Administration (USFDA) for Rizatriptan Benzoate ODT 5mg & 10mg and Rizatriptan Benzoate Tablets USP, 5mg & 10mg which are therapeutically equivalent to Maxalt - MLT Tablets 5mg & 10mg and Maxalt Tablets 5mg 10mg of Merck & Company, Inc.

The BSE Sensex is currently trading at 28905.38, down by 94.18 points or 0.32% after trading in a range of 28815.48 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 0.58%, while Small cap index was down by 0.30%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.12%, Consumer Durables up by 0.10% and Bankex up by 0.09%, while, Metal down by 1.70%, Oil & Gas down by 1.22%, Realty down by 1.15%, Energy down by 1.13% and Basic Materials down by 0.81% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 0.54%, Power Grid up by 0.36%, SBI up by 0.34%, TCS up by 0.28% and Cipla up by 0.27%. On the flip side, Axis Bank down by 1.52%, Tata Steel down by 1.43%, ONGC down by 1.38%, Mahindra & Mahindra down by 1.24% and Adani Ports & SEZ down by 1.23% were the top losers.

Meanwhile, domestic credit rating agency, ICRA in its latest report has said that the compensation law approved by the government for revenue losses related to the transition to the goods and services tax (GST) system will bring certainty to state budgeting. However, the report noted that the temporary disruption may be witnessed on account of transition to the GST and forecasted that the pace of growth of central transfers to state governments will halve in the coming fiscal.

The rating agency said that after the transition to the GST, the states' own revenues will increase by 14 per cent for the first five years, reducing the extent of uncertainty for budget preparation at the state level. On the same time, it projected decline in the pace of growth of central tax devolution to 10.9 per cent in FY2018- Budget Estimates from 20.1 per cent in FY2017- revised estimates, due to slowdown in the year-on-year growth of the excise duty and service tax collections.

ICRA stated that the GST on services accruing to the states on an aggregate basis will be twice as high as the share of service tax devolved to the state governments, on every Rs 100 of taxable services in the current regime.  Moreover, compensation for losses by the centre would protect against any medium-term downside to the state governments’ revenues.

The CNX Nifty is currently trading at 8925.85, down by 21.05 points or 0.24% after trading in a range of 8891.95 and 8957.05. There were 17 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 1.54%, Zee Entertainment up by 0.94%, Kotak Mahindra Bank up by 0.89%, Indusind Bank up by 0.74% and Bosch up by 0.73%. On the flip side, Idea Cellular down by 1.84%, Hindalco down by 1.79%, BHEL down by 1.53%, Axis Bank down by 1.49% and ONGC down by 1.43% were the top losers.

Asian markets were trading mixed; KOSPI Index increased 1.36 points or 0.06% to 2,095.41, Taiwan Weighted increased 15.38 points or 0.16% to 9,753.45 and Hang Seng increased 101.2 points or 0.43% to 23,782.27. On the flip side, Nikkei 225 decreased 90.12 points or 0.47% to 19,254.03, Jakarta Composite decreased 6.24 points or 0.12% to 5,396.37, FTSE Bursa Malaysia KLCI decreased 1.8 points or 0.1% to 1,726.86 and Shanghai Composite decreased 1.74 points or 0.05% to 3,240.67.

All European markets were trading in red; France’s CAC decreased 8.82 points or 0.18% to 4,946.18, UK’s FTSE 100 decreased 1.7 points or 0.02% to 7,337.29 and Germany’s DAX decreased 0.2 points or 0% to 11,965.94.