Markets extend losses in late afternoon session

Indian equity benchmarks extended their losses in late afternoon session on the back of heavy selling pressure in Healthcare, IT and Consumer Durables stocks. However, the broader markets showed some fervor and traded with notable gains, performing better than their larger peers. Weak opening in European markets and expectations of no further rate cuts by Reserve Bank of India (RBI) this year also impacted the sentiments. Even a strong rupee against dollar and healthy macro-economic data failed to uplift investors' sentiments. Traders remained pessimistic with the report that RBI projected retail inflation to increase to 5% in the second half of the current fiscal citing risks of El Nino impacting the monsoon and one-off effects of the Goods and Services Tax. The central bank also said that a prominent risk could emanate from managing the implementation of the allowances recommended by the 7th Central Pay Commission (CPC).

On the global front, European markets were trading in red as geopolitical concerns grew after the US fired cruise missiles against an air base in Syria, raising concerns of an escalating conflict in the region. Asian markets were also trading in red. Back home, in scrip specific development, Larsen & Toubro (L&T) traded higher after the company commissioned gas turbines in open cycle for two large gas-based power projects in Bangladesh in quick succession during March 2017. 

The BSE Sensex is currently trading at 29788.99, down by 138.35 points or 0.46% after trading in a range of 29763.02 and 29886.12. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.24%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Telecom up by 1.23%, Oil & Gas up by 0.92%, PSU up by 0.47%, Capital Goods up by 0.40% and Industrials up by 0.15%, while Healthcare down by 0.93%, IT down by 0.63%, Consumer Durables down by 0.55%, Metal down by 0.51% and Bankex down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.36%, Bajaj Auto up by 1.18%, TCS up by 0.83%, NTPC up by 0.54% and HDFC Bank up by 0.45%. On the flip side, Sun Pharma down by 2.78%, Adani Ports & SEZ down by 2.22%, Lupin down by 2.06%, Infosys down by 1.75% and Reliance Industries down by 1.48% were the top losers.

Meanwhile, Asian Development Bank (ADB), anticipating India to grow at 7.4% in 2017-18 and 7.6% in 2018-19, in its latest report has said that the demonetisation of high-value bank notes is likely to have a positive impact over the medium term and coupled with the forthcoming implementation of the goods and services tax (GST), will widen the tax net and improve tax compliance. It also said that with more people channelising their savings into the banking system, banks will have more money to lend at lower rates and lower aggregate deposit costs should improve bank profitability, further increasing their lending capacity.

The report titled ‘Asian Development Outlook’ has found that the note ban was to foster digitisation, improving tax compliance and channelising additional savings through the formal banking system. However, it also noted that India is a cash-intensive society, with an estimated 78% of consumer payments made in cash, hence the initial currency crunch, caused by the slow pace or remonetisation, hit economic activity, causing a temporary drop in consumption and employment.

Noting that the temporary drop in demand led to a decline in inflation, the ADB said that the return of demonetised notes caused bank deposits to surge and lending rates to drop and the steady progress in remonetisation is expected to rapidly rectify the situation.

The CNX Nifty is currently trading at 9227.80, down by 34.15 points or 0.37% after trading in a range of 9212.60 and 9250.50. There were 17 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were BPCL up by 4.98%, Indian Oil Corp. up by 3.56%, Bharti Infratel up by 2.67%, Bharti Airtel up by 1.24% and Bajaj Auto up by 1.02%. On the flip side, Sun Pharma down by 2.93%, Adani Ports & SEZ down by 2.31%, Lupin down by 2.25%, Indiabulls Housing down by 1.88% and Dr. Reddy’s Lab down by 1.84% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite decreased 29.79 points or 0.52% to 5,650.45, Taiwan Weighted decreased 24.43 points or 0.25% to 9,873.37, Hang Seng decreased 6.42 points or 0.03% to 24,267.30, FTSE Bursa Malaysia KLCI decreased 1.57 points or 0.09% to 1,737.99 and KOSPI Index decreased 1.02 points or 0.05% to 2,151.73. On the flip side, Shanghai Composite increased 5.61 points or 0.17% to 3,286.62 and Nikkei 225 increased 67.57 points or 0.36% to 18,664.63.

All European markets were trading in red; Germany’s DAX decreased 58.05 points or 0.47% to 12,172.84, France’s CAC decreased 12.89 points or 0.25% to 5,108.55 and UK’s FTSE 100 decreased 0.22 points or 0% to 7,302.98.