Indian benchmarks extend losses; Nifty slips below 9250 mark

Indian benchmark indices extended losses, continued to trade in red in the noon session, with Nifty falling below the 9250 level, as investors remained cautious ahead of the Reserve Bank of India’s (RBI’s) monetary policy to be announced later in the day. The monetary policy committee 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 demonetisation. Weak trend in Asian stocks coupled with depreciation in rupee value against the Dollar also weighed on the sentiments. Indian rupee depreciated 18 paise to 65.05 against the US Dollar on Thursday, on fresh demand for the American unit from importers and banks. Investors shrugged off Asian Development Bank’s (ADB) report that India’s growth rate will improve to 7.4% during 2017-18 and go up further to 7.6% in the next fiscal. According to the ADB, India has taken a host of economic reforms initiative, including the Goods and Services Tax (GST) and liberalization of the FDI regime, with a view to improve business climate and promote growth. Meanwhile, the country's services sector registered second straight month of growth in March, driven by strong rise in new work orders amid softer inflationary pressures. The Nikkei India Services Purchasing Managers’ Index (PMI), which tracks the services sector output on a monthly basis, rose from 50.3 in February to 51.5 in March.

On the global front, Asian markets were trading mostly lower on Thursday, as investors were spooked by Federal Reserve minutes showing it is mulling a plan to tighten monetary policy by sucking cash out of the financial system. Investors were also wary ahead of a potentially tense meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping, the first between the world’s two most powerful leaders.

 Back home, stocks from Realty, Oil & Gas and IT counters were supporting the markets, while those from Metal, Telecom and FMCG counters were adding to the underlying cautious undertone. In scrip specific development, Jubilant Life Sciences gained after the company received Abbreviated New Drug Application (ANDA) final approval for Celecoxib Capsules, 50 mg, 100 mg, 200 mg, and 400 mg, the generic version of Celebrex of GD Searle, which is used for the treatment of Osteoarthritis and Rheumatoid Arthritis. Further, shares of railway related companies such as Texmaco Rail & Engineering, Kernex Microsystems and Stone India gained traction after the government approved setting up of Rail Development Authority.

The market breadth remained pessimistic, as there were 1144 shares on the gaining side against 1409 shares on the losing side, while 118 shares remained unchanged.

The BSE Sensex is currently trading at 29820.12, down by 154.12 points or 0.51% after trading in a range of 29817.59 and 29948.44. 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 0.34%, while Small cap index down by 0.44%.

The top gaining sectoral indices on the BSE were Realty up by 0.72%, Oil & Gas up by 0.30%, IT up by 0.09% and Energy up by 0.05%, while Metal down by 1.27%, Telecom down by 0.96%, FMCG down by 0.87%, Capital Goods down by 0.83% and Healthcare down by 0.80% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.59%, Axis Bank up by 0.62%, Infosys up by 0.57%, GAIL India up by 0.37% and Reliance Industries up by 0.19%. On the flip side, ICICI Bank down by 1.49%, Adani Ports & SEZ down by 1.44%, ITC down by 1.42%, Larsen & Toubro down by 1.41% and Coal India down by 1.40% were the top losers.

Meanwhile, citing the expectations of increasing pressure on food prices as well as uptick in global oil and commodity rates, the ratings agency Crisil in its latest report has said that Consumer price index (CPI)-based inflation is likely to average higher at 5 percent in the fiscal 2018, 30 bps higher than in fiscal 2017. As per the report, CPI based inflation averaged 4.6 percent in the first 11 months of 2016-17 and could be about 4.7 percent for the entire fiscal ended March 31, 2017.

The ratings agency has said that inducements to inflation are indeed many in the road ahead. To wit, pent-up demand after demonetisation, lower bank lending rates, the second tranche of payments based on the Seventh Pay Commission recommendations and an uptick in global oil, metals and agri-commodity prices after about 3 benign years. It added that not surprisingly, the sharper-than-expected fall in inflation over the past few months has already started correcting as remonetisation gained currency.

According to the report, some of the key factors to influence food inflation in FY18 are higher global prices, risk of El nino on monsoons, fading demonetisation effect on perishables goods. It also said that food price pressures could build up anew if El Nino disrupts the south-west monsoon this year, while core inflation, which has been sticky, could also edge up if domestic demand improves.

Moreover, the rating agency expects the global prices to rise 7.8 percent for current financial year. This, along with a weaker rupee, will put upward pressure via imported inflation. It added that currently, the rupee has been appreciating, which is beneficial to inflation, however, the trend is not expected to continue. The rupee could see some weakness in fiscal 2018 as the dollar strengthens on the back of anticipated reforms, Fed rate hikes and stronger recovery in the US.

The CNX Nifty is currently trading at 9225.25, down by 39.90 points or 0.43% after trading in a range of 9220.00 and 9245.80. There were 13 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 1.59%, Indian Oil Corporation up by 1.17%, Indusind Bank up by 1.08%, Infosys up by 0.50% and Zee Entertainment up by 0.40%. On the flip side, Hindalco down by 2.72%, Indiabulls Housing down by 1.90%, Adani Ports & SEZ down by 1.63%, ITC down by 1.52% and Coal India down by 1.43% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 1.65%, Hang Seng decreased 0.57%, Taiwan Weighted fell 0.52%, Jakarta Composite slipped 0.46%, KOSPI Index shed 0.51% and FTSE Bursa Malaysia KLCI was down by 0.27%. On the flip side, Shanghai Composite was up by 0.36%.