Indian benchmarks continue to trade in red in noon session

Indian benchmark indices continued their weak trade in noon session, as investors and foreign funds were adopting a cautious approach, ahead of key political and economic events in the U.S. and Europe. Sentiments remained subdued after Reserve Bank of India (RBI) raised concerns over the possibility of fiscal slippages due to the farm loan waivers. RBI also cut the economic growth projection to 7.3% for the current fiscal from 7.4% earlier. The central bank, however, used a less hawkish tone and reduced the Statutory Liquidity Ratio (SLR) in its second bi-monthly monetary policy for financial year 2017-18. The slashed in SLR or the percentage of deposits that banks have to park in government securities by 0.5% to 20% will allow banks to increased lending. Further, market participants turned jittery after chief economic adviser Arvind Subramanian expressed his unhappiness over the Reserve Bank's inflexibility on interest rates. He warned that real policy rates are becoming tighter and rising at a time of low inflation and slowing growth. Meanwhile, Liquor stocks gained traction after Karnataka state government decided to send a proposal to the union government seeking to denotify the national highways (NH) pass through urban local bodies in Karnataka as local roads. Likewise, shares of steel companies were trading higher in an otherwise subdued market on the expectations of a revival in consumption during the current financial year 2017-18.

On the global front, Asian markets were trading mostly in green on Thursday, as investors braced for any surprises from the UK elections, the European Central Bank's policy meeting and congressional testimony from ex-FBI director James Comey who was fired by President Donald Trump last month. The British pound held firm at $1.2957, near its highest levels in two weeks, supported in part by polls showing Prime Minister Theresa May is on course to increase her majority in parliament.

Back home, stocks from Metal, Healthcare and Basic Materials counters were supporting the markets’ uptrend, while those from IT, Teck and Oil & Gas counters were adding to the underlying cautious undertone. In scrip specific development, Strides Shasun surged after the company received approval from the United States Food & Drug Administration (USFDA) for Amantadine Hydrochloride Capsules USP, 100 mg. On the other hand, Petronet LNG declined on the report that GDF International is set to offload its entire 10% stake in the company.

The market breadth remained optimistic, as there were 1213 shares on the gaining side against 1101 shares on the losing side, while 128 shares remained unchanged.

The BSE Sensex is currently trading at 31232.36, down by 38.92 points or 0.12% after trading in a range of 31214.35 and 31354.51. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.18%, while Small cap index up by 0.24%.

The top gaining sectoral indices on the BSE were Metal up by 1.31%, Healthcare up by 1.17%, Basic Materials up by 0.57%, Realty up by 0.51% and Bankex up by 0.19%, while IT down by 1.35%, TECK down by 1.14%, Oil & Gas down by 1.01%, Consumer Durables down by 0.91% and Telecom down by 0.71% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 3.63%, Tata Steel up by 3.40%, HDFC up by 2.15%, Sun Pharma up by 2.10% and Lupin up by 1.04%. On the flip side, GAIL India down by 2.99%, TCS down by 2.92%, ONGC down by 1.42%, Hero MotoCorp down by 1.35% and Adani Ports &Special down by 1.31% were the top losers.

Meanwhile, raising concerns over the recent spate of farm loan waivers across the country, the Reserve Bank of India (RBI) Governor Urjit Patel has said that rush for such actions may harm the country’s fiscal health and may have inflationary spillovers. He said that past episodes have shown when there are significant fiscal slippages they do permeate through inflation sooner or later.

RBI governor further warned that unless there is existing fiscal space in the state budgets, the states should avoid going down the slippery path of farm loan waivers, as it would be risky to tread on that path and could dissipate the state’s fiscal gains made over the past two-three years, noting that the country need to tread path very carefully before it gets out of hand.

In April, the Uttar Pradesh government had waived farm loans worth Rs36,000 crore for marginal and small farmers of the state, following that recently, Maharashtra government had said it will announce a loan waiver of Rs 30,000 crore, owed by farmers with up to five acres of land, by October.

The CNX Nifty is currently trading at 9657.10, down by 6.80 points or 0.07% after trading in a range of 9643.05 and 9688.70. There were 20 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 3.70%, Tata Steel up by 3.37%, Sun Pharma up by 2.15%, HDFC up by 2.07% and Tata Motors - DVR up by 1.53%. On the flip side, GAIL India down by 3.01%, TCS down by 2.89%, Hero MotoCorp down by 1.32%, Bharti Infratel down by 1.25% and ONGC down by 1.16% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite rose 0.01%, FTSE Bursa Malaysia KLCI gained 0.06%, Shanghai Composite increased by 0.14%, Taiwan Weighted added 0.15% and Hang Seng was up by 0.13%.

On the flip side, Nikkei 225 declined 0.38% and KOSPI Index was down by 0.02%.