Benchmarks trade slightly in red in early deals; Nifty holds 9,400 mark

Indian equity benchmarks have made a cautious start and are trading slightly in red in early deals, as traders remained on sidelines ahead of government release of a new series of Index of Industrial Production (IIP) and Wholesale Price Index (WPI) later in the day, in a bid to map economic activity more accurately. However, losses remained capped as some support also came with SBI Research’s Ecowrap report, which has said that the easing of crude oil prices will have positive effect not only on inflation but also on GDP growth. It has said that average crude oil prices will be around $ 45 for the next half of this year and this, coupled with positive macro fundamentals, could translate into better growth numbers for the country. 30,200 for Sensex and 9,400 for Nifty proved to be strong support levels.

On the global front, Asian markets were exhibiting mixed trend at this point of time on concern about the appetite of US consumers to keep spending. The Japanese market too was in red as the yen rose against the dollar. The US markets reacting to some weak earnings made another soft closing in the last session, with traders fearing that consumers are not spending enough to drive strong economic growth.

Back home, Chief Economic Adviser Arvind Subramanian slamming global credit rating agencies for not upgrading India despite clear improvement in its economic fundamentals has said that they are following ‘inconsistent’ standards while rating India and China. Stocks related to textile sector remained buzzing, as the Finance Ministry has extended by one year the validity of existing anti-dumping duty on Partially Oriented Yarn (POY) imports from China.

The BSE Sensex is currently trading at 30203.80, down by 47.18 points or 0.16% after trading in a range of 30152.23 and 30299.74. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.81%, while Small cap index was down by 0.75%.

The few gaining sectoral indices on the BSE were IT up by 0.67%, TECK up by 0.34% and Capital Goods up by 0.03%, while Realty down by 1.36%, Healthcare down by 1.30%, Consumer Disc down by 0.69%, Basic Materials down by 0.69% and Telecom down by 0.57% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.41%, ONGC up by 0.81%, Coal India up by 0.76%, Larsen & Toubro up by 0.76% and Hero MotoCorp up by 0.67%. On the flip side, Asian Paints down by 3.00%, GAIL India down by 1.20%, Dr. Reddy’s Lab down by 1.10%, ICICI Bank down by 1.08% and Tata Steel down by 0.97% were the top losers.

Meanwhile, citing clear improvement in India’s economic fundamentals, the Chief economic advisor (CEA) Arvind Subramanian has slammed global rating agencies for not upgrading the country’s ranking and said that they are following ‘inconsistent’ standards while rating India and China. He also said that India has been placed in the lowest investment grade by the ratings agencies which lead to higher cost of borrowing in the global markets due to investor risk perceptions associated with it.

Subramanian has said that in recent years, rating agencies have maintained India's ‘BBB-’ rating, notwithstanding clear improvements in their economic fundamentals such as inflation, growth, and current account performance. At the same time, China's rating has actually been upgraded to ‘AA-’, even though its fundamentals have deteriorated.

He also said ‘In other words, the ratings agencies have been inconsistent in their treatment of China and India. Given this record --- what we call Poor Standards -- my question is: why do we take these rating analysts seriously at all?’ Pointing out instances where global ratings agencies have fallen short of expectations, he said they consistently fail to provide advance warnings of financial crisis and downgrade a country after the fact. In the US, they had given AAA ratings to mortgage-ridden securities, which later dragged down the economy and created a crisis.

Meanwhile, the global agency Fitch Ratings has retained the ‘BBB-’ sovereign rating-the lowest investment grade-on India holding that weak public finances continue to constrain India’s ratings. Though, the agency also retained stable outlook for the country’s ratings. Besides, Moody's and Standard & Poor's also have not upgraded India, contending that the government needs to do more. In November, Moody's refused to upgrade India, saying the economic initiatives of PM Modi's government are yet to produce results.

The CNX Nifty is currently trading at 9401.40, down by 21.00 points or 0.22% after trading in a range of 9384.05 and 9437.75. There were 16 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.44%, Tech Mahindra up by 1.31%, ONGC up by 1.06%, Coal India up by 1.02% and Hero MotoCorp up by 0.85%. On the flip side, Asian Paints down by 3.03%, Indiabulls Housing down by 2.04%, Zee Entertainment down by 1.95%, Bharti Infratel down by 1.93% and Aurobindo Pharma down by 1.23% were the top losers.

Asian markets were trading mixed; FTSE Bursa Malaysia KLCI rose 0.41 points or 0.02% to 1,775.80, Shanghai Composite increased 11.99 points or 0.39% to 3,073.49, Hang Seng gained 19.02 points or 0.08% to 25,144.57 and Jakarta Composite was up by 34.18 points or 0.6% to 5,687.18.

On the flip side, Nikkei 225 decreased 120 points or 0.6% to 19,841.55, Taiwan Weighted dropped 31.76 points or 0.32% to 9,969.72 and KOSPI Index was down by 8.15 points or 0.35% to 2,288.22.