Weak global cues drag benchmarks lower in early deals

Pressurized by weak global cues, Indian equity benchmarks have made a somber start and are trading in red in early deals. Traders remained concerned with the inclusion of Chinese mainland stocks to the MSCI index, which could lead to hundreds of billions of dollars worth of share purchases, shrinking shares of other emerging markets, including India. However, losses remained capped, as some solace came with finance minister Arun Jaitley’s statement that the Centre will stick to its fiscal deficit target of 3.2% of gross domestic product (GDP) for 2017-18. Jaitley also made it clear that the Centre has no plans to announce any farm loan waiver.

On the global front, Asian markets were trading mostly in red at this point of time led by the Japanese market, which was down by around half a percent. The US markets ended mostly in red and the Dow and the S&P 500 pulled back off yesterday's record closing highs, amid a sharp drop by the price of crude oil and lacking any major US economic data in last session.

Back home, textile stocks remained on buyers’ radar after the rating agency ICRA in its latest report has said that the impact of the Goods and Services Tax (GST) is likely to be neutral to positive across segments in the textile industry compared to the current tax regime. However, housing finance companies remained under pressure on ICRA report that housing credit growth moderated to 16 per cent in 2016-17 from 19 per cent in 2015-16. The market breadth indicating the overall health of the market was evenly divided, with 930 shares gaining and 917 shares declining, while a total of 101 shares were unchanged.

The BSE Sensex is currently trading at 31228.98, down by 68.55 points or 0.22% after trading in a range of 31193.61 and 31305.60. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.01%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were Realty up by 1.04%, Capital Goods up by 0.59%, Industrials up by 0.18%, Consumer Durables up by 0.17% and Telecom was up by 0.07%, while Metal down by 0.77%, Auto down by 0.62%, Oil & Gas down by 0.58%, Utilities down by 0.53% and PSU was down by 0.48% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 0.93%, Reliance Industries up by 0.45%, Sun Pharma up by 0.43%, Asian Paints up by 0.41% and Hindustan Unilever up by 0.30%. On the flip side, Lupin down by 1.89%, ONGC down by 1.75%, Power Grid down by 1.66%, Tata Motors down by 1.04% and HDFC down by 0.88% were the top losers.

Meanwhile, clearing the air on farm loan waiver, the Union Finance Minister Arun Jaitley has said that the Centre is not considering any proposal for farm loan waiver and it will stick to its fiscal deficit target of 3.2 percent of gross domestic product (GDP) for 2017-18. He said ‘There is no such proposal for farm loan waiver. We have got FRBM Act and fiscal deficit target, we intend adhering to it.’ He added that states that want to go in for waiver schemes will have to generate them from their own resources. Beyond that, the central government has nothing more to say.

Arun Jaitley’s statement comes at a time when states like Madhya Pradesh, Rajasthan and Maharashtra witnessed violent farmers' protests over support price and loan waiver. After Uttar Pradesh and Maharashtra, Punjab also announced a loan waiver for farmers but centre refused to do the same. Despite a bumper crop this rabi season, farmers in many states are in distress because of sharp fall in prices in both domestic and global market. Farmers in various parts of the country have been agitating, seeking higher support prices for their produce as well as waiver of loans.

In Union Budget 2017-18, the fiscal deficit has been pegged at 3.2 percent, lower than 3.5 percent in the last financial year. The Fiscal Responsibility and Budget Management (FRBM) committee, headed by former revenue secretary NK Singh, has recommended keeping budgetary deficit at 3 percent of the GDP in three years to March 2020. It also suggested progressively reducing it to 2.5 percent by 2022-23.

The CNX Nifty is currently trading at 9616.25, down by 37.25 points or 0.39% after trading in a range of 9609.35 and 9650.45. There were 8 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 0.89%, Tech Mahindra up by 0.63%, Sun Pharma up by 0.56%, Bank of Baroda up by 0.54% and Hindustan Unilever up by 0.54%. On the flip side, Lupin down by 2.05%, ONGC down by 1.92%, Eicher Motors down by 1.79%, Power Grid down by 1.56% and Vedanta down by 1.55% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 142.6 points or 0.55% to 25,700.44, Nikkei 225 shed 93.69 points or 0.46% to 20,136.72, KOSPI Index declined 13.04 points or 0.55% to 2,356.19, Taiwan Weighted slipped 4.18 points or 0.04% to 10,320.28, FTSE Bursa Malaysia KLCI decreased 4.07 points or 0.23% to 1,776.64 and Jakarta Composite was down by 2.26 points or 0.04% to 5,789.65.

On the flip side, Shanghai Composite was up by 4.7 points or 0.15% to 3,144.71.