Benchmarks extend losses in late morning session

Indian equity benchmarks extended their losses in late morning session on account of selling in front line blue chip counters. Investors booked profits ahead of the Reserve Bank of India’s (RBI) monetary policy outcome, while negative trend seen in Asian markets also impacted the sentiment. The rupee opened lower against dollar as traders avoided making any risky bets prior to the RBI policy outcome. As per the poll, the monetary policy committee of the RBI is likely to leave the repo rate at 6.25%, where it has been since October. However, investors are expecting the RBI to announce measures to absorb liquidity that has accumulated post demonetization. Some pressure also crept in after global credit rating agency CRISIL in its latest report said that RBI will have to continue its vigil on inflation all through the current fiscal due to rising food prices, pick up in global commodities and stubborn demand led inflation. The agency expects inflation to average 5% in the fiscal year ended March 2018 higher than the 4.7% estimate for the fiscal ended March 2017, mainly as both food and non- food prices will be elevated.

The street maintained a cautious approach after yesterday opposition questioned preparedness on new tax regime when the four bills related to GST was taken up in Rajya Sabha. Initiating a debate on the bills, Deputy Leader of Congress Anand Sharma raised concerns about the government's preparedness to implement the GST in the midst of the financial year, saying there is hardly any time left now as the Government is keen to roll out the indirect tax reform from July 1. Investors shrugged off the Asian Development Bank (ADB) report which highlighted that India’s growth rate will improve to 7.4% during 2017-18 and go up further to 7.6% in the next financial year, remaining ahead of China. The impact of the demonetization of high-value banknotes is dissipating as the replacement banknotes enter circulation. Stronger consumption and fiscal reforms are also expected to improve business confidence and investment prospects in the country. Traders were seen piling position in Realty, Energy and Oil & Gas stocks, while selling was witnessed in Metal, Telecom and FMCG sector stocks. In scrip specific development, Brahmaputra Infrastructure was trading firm on receiving a Letter of Award (LoA) for execution of the construction of residential complex at Rehabari, Guwahati - 08 Package No CW/ Residential Complex for the contract price of approximately Rs 44.80 crore from Government of Assam.

On the global front, Asian shares were trading mostly in red, with risk appetite soured by signs the Fed might start paring its king-sized balance sheet later this year just as the chances of an early US fiscal stimulus faded further. Investors were also wary ahead of a potentially tense meeting between US President Donald Trump and his Chinese counterpart Xi Jinping, the first between the world’s two most powerful leaders. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,250 and 29,900 levels respectively. The market breadth on BSE was negative in the ratio of 1065:1301, while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 29859.37, down by 114.87 points or 0.38% after trading in a range of 29833.45 and 29948.44. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.23%, while Small cap index was down by 0.37%.

The top gaining sectoral indices on the BSE were Realty up by 1.01%, Energy up by 0.20%, Oil & Gas up by 0.15% and IT up by 0.14%, while Metal down by 1.23%, Telecom down by 1.11%, FMCG down by 0.80%, Healthcare down by 0.77% and Basic Materials down by 0.62% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.42%, Axis Bank up by 0.99%, Reliance Industries up by 0.72%, Infosys up by 0.61% and NTPC up by 0.15%.

On the flip side, Adani Ports & Special Economic Zone down by 1.55%, Tata Steel down by 1.51%, Hindustan Unilever down by 1.51%, ITC down by 1.38% and Coal India down by 1.38% were the top losers.

Meanwhile, KV Kamath, the first head of the Shanghai-based multilateral lending institution 'New Development Bank' (NDB) set up by BRICS nations has said that developing countries including India need to make a strong case for credit ratings upgrade and ensure that their voice is heard by the global agencies. Kamath said that 'We (India) should make a strong case (for rating upgrade). The developing countries will have to make a strong case for where they are and how they should be looked at.

India has often criticised methodology used by rating agencies like Moody’s and S&P which have pegged the country’s rating at a lower level at BBB-, despite dramatic improvement in growth and macro-economic stability since 2014.While, the government feels the agencies have not accounted for a steady decline in the India’s debt burden in recent years and have ignored its levels of development when assessing their fiscal strength. Better credit rating helps obtain loans in the international market at cheaper rates and boost investor confidence.

Last year, BRICS agreed to set up an independent ratings agency based on market-oriented principles saying it would further strengthen global governance architecture. At that time Kamath had expressed concerns over methodologies of the three global agencies (S&P, Fitch, Moody’s) saying that these constrain growth in emerging nations. He had said that ratings of multilateral banks like the BRICS-promoted NDB were affected by the parent countries’ ratings, despite having deep capital buffers.

The CNX Nifty is currently trading at 9226.40, down by 38.75 points or 0.42% after trading in a range of 9220.00 and 9245.80. There were 14 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 1.44%, Axis Bank up by 0.73%, Reliance Industries up by 0.67%, Indian Oil Corporation up by 0.64% and Bank of Baroda up by 0.52%.

On the flip side, Hindalco down by 2.70%, Adani Ports & Special Economic Zone down by 1.73%, ITC down by 1.60%, Tata Steel down by 1.48% and Hindustan Unilever down by 1.47% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 289.64 points or 1.54% to 18,571.63, Hang Seng decreased 141.92 points or 0.58% to 24,258.88, Taiwan Weighted decreased 59.19 points or 0.59% to 9,890.29, Jakarta Composite decreased 26.1 points or 0.46% to 5,650.88, KOSPI Index decreased 14.53 points or 0.67% to 2,146.32 and FTSE Bursa Malaysia KLCI decreased 4.74 points or 0.27% to 1,739.93.

On the other hand, Shanghai Composite increased 6.5 points or 0.2% to 3,276.80.