Benchmarks continue to trade in red; Nifty below 9,100 mark

Indian benchmark indices continue to trade in negative territory in noon session as funds and retail investors engaged in reducing positions amid a weak trend in global markets. Sentiments remained subdued with the report that IMF trimmed India’s annual growth forecast by 0.4 percentage points to 7.2% for 2017, citing the temporary negative consumption shock induced by cash shortages and payment disruptions from the recent demonetization move. Adding the woes, India’s largest software services exporter, Tata Consultancy Services (TCS) missed estimates on both the profit and revenue front with negative growth in the BFSI and retail segments. The company’s net profit for the Q4 fell 2.5% sequentially to Rs 6,608 crore, while revenues declined 0.3% to Rs 29,642 crore. It’s for the second consecutive quarter that it has underperformed Infosys. However, losses remained capped with the repot that India jumped one spot to 8th rank in the 2017 A.T. Kearney Foreign Direct Investment (FDI) Confidence Index. Governance and regulatory issues made up 7 of the top-10 factors that investors consider when deciding on an investment destination according to the report.

On the global front, Asian markets were trading mostly lower on Wednesday as investors turned jittery after British Prime Minister Theresa May's surprise decision to hold early elections. Equity markets in China were hardest hit, with the benchmark index in Shanghai tumbling for a fourth day. Shares from Sydney to Seoul also fell, but Japan bounced back from earlier losses as the yen weakened. Besides, weak corporate earnings, weighed on Wall Street investors sentiments. Meanwhile, U.S. crude oil futures lost 11 cents to $52.30 per barrel in electronic trading on the New York Mercantile Exchange.

Back home, stocks from Power, Realty and PSU counters were supporting the markets, while those from IT, Banking and Oil & Gas counters were adding to the underlying cautious undertone. In scrip specific development, RPP Infra Projects surged after the company received an order from Power Grid Company of Bangladesh (PGCB). The joint bid submitted by Siemens and RPP Infra Projects to PGCB is in respect of design, supply, erection, testing and commissioning of 230 KV and 132 KV substations on turnkey basis. Furthermore, Bodhtree Consulting jumped after the company bagged an order worth Rs 18.27 crore from Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company, Jabalpur to provide Annual Technical Support (ATS) for the software products of ESRI, Microsoft, Protocol Automation India and McAfee.

The market breadth remained optimistic, as there were 1330 shares on the gaining side against 1135 shares on the losing side, while 130 shares remained unchanged.

The BSE Sensex is currently trading at 29296.95, down by 22.15 points or 0.08% after trading in a range of 29241.48 and 29373.55. 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 0.35%, while Small cap index up by 0.33%.

The top gaining sectoral indices on the BSE were Utilities up by 1.82%, Power up by 1.74%, Realty up by 0.49%, PSU up by 0.37% and Basic Materials up by 0.28%, while IT down by 0.56%, Bankex down by 0.38%, TECK down by 0.36%, Oil & Gas down by 0.13% and Auto down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 3.56%, NTPC up by 2.04%, Adani Ports & SEZ up by 1.27%, Sun Pharma up by 1.04% and Maruti Suzuki up by 0.63%. On the flip side, Axis Bank down by 0.96%, TCS down by 0.89%, SBI down by 0.67%, Infosys down by 0.66% and Hero MotoCorp down by 0.62% were the top losers.

Meanwhile, International Monetary Fund (IMF) has cut India’s annual growth estimate for 2017 by 0.4 percentage points to 7.2 per cent, mainly owing to temporary negative consumption shock induced by cash shortages and payment disruptions from recent currency note withdrawal and exchange initiative.

However, the IMF, in its World Economic Outlook, also estimated that Indian economy would grow at 7.7 per cent in 2018-19. The report also stated that the country’s medium-term growth prospects are favourable, with growth expected to increase to about 8 per cent due to implementation of key reforms, loosening of supply-side bottlenecks and appropriate fiscal and monetary policies. Adding further, it said that in the recent years, Indian economy has grown at a strong pace due to the implementation of critical structural reforms, favourable terms of trade and lower external vulnerabilities.

According to the report, beyond the immediate challenge of replacing currency in circulation following the demonetization move, policy actions should focus on reducing labour and product market rigidities to ease firm entry and exit, expand the manufacturing base, and gainfully employ the abundant pool of labour. It also pointed out that policy actions should also fillip financial stability through full recognition of non-performing loans and raising public sector banks' capital buffers and secure the public finances through continued reduction of poorly targeted subsidies and structural tax reforms, including implementation of the recently approved nationwide Goods and Services Tax (GST).

The CNX Nifty is currently trading at 9088.90, down by 16.25 points or 0.18% after trading in a range of 9079.50 and 9120.50. There were 16 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 3.71%, Tata Power up by 2.51%, Bharti Infratel up by 2.45%, NTPC up by 2.07% and Adani Ports & SEZ up by 1.25%. On the flip side, Indiabulls Housing down by 1.69%, Axis Bank down by 1.29%, TCS down by 0.94%, Hero MotoCorp down by 0.78% and Ambuja Cement down by 0.77% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 0.6%, Taiwan Weighted shed 1.09%, Shanghai Composite dropped 1.25%, KOSPI Index fell 0.35% and FTSE Bursa Malaysia KLCI was down by 0.09%. On the flip side, Nikkei 225 increased 0.2% and Jakarta Composite was up by 0.52%.