Benchmarks make cautious start; Nifty breaches 9,600 mark

Pressurized by weak global cues, Indian equity benchmarks have made a cautious start and are trading with a cut of around one third of a percent in early deals. However, losses remained capped as some support came with Reserve Bank Governor Urjit Patel’s statement that he is not 'overly pessimistic' about employment scenario in the IT sector, pointing out that mushrooming startups can compensate for job losses. Meanwhile, the Union Cabinet passed a resolution expressing gratitude to Chief Ministers of States and others for their cooperation in introduction of GST, calling it the biggest tax reform in independent India.

On the global front, Asian markets exhibiting mixed trend at this point of time even though oil halted its losing streak. Chinese equities remain in the limelight as the nation’s banking watchdog raised scrutiny on some of the biggest dealmakers. The US markets continued their lackluster performance and made another mixed closing in the last session.

Back home, the banking stocks remained under pressure with credit rating agency ICRA stating that asset quality pain for banks is expected to continue in financial year 2018 due to restructuring by banks, weakness in some large corporate accounts and moves like waiver of farm loans. On the other hand, IT stocks were trading with traction despite Industry body Nasscom’s projection that India's IT industry is expected to grow at the slowest pace in nearly a decade as clients defer spending in the face of geopolitical uncertainties. Software export growth in financial year 2017-18 is projected at 7-8 per cent in constant currency terms, down from 8.6 per cent last year.

The BSE Sensex is currently trading at 31205.25, down by 85.49 points or 0.27% after trading in a range of 31197.36 and 31365.39. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.33%, while Small cap index was down by 1.39%.

The only gaining sectoral indices on the BSE were IT up by 0.27% and TECK was up by 0.10%, while Metal down by 1.68%, Realty down by 1.57%, Oil & Gas down by 1.44%, Basic Materials down by 1.38% and Industrials down by 1.16% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.19%, Wipro up by 0.73%, Dr. Reddys Lab up by 0.69%, Lupin up by 0.65% and Sun Pharma up by 0.61%. On the flip side, Tata Steel down by 1.89%, Hero MotoCorp down by 1.75%, ONGC down by 1.62%, ICICI Bank down by 1.36% and Maruti Suzuki down by 1.26% were the top losers.

Meanwhile, amidst growing concern of protectionism, industry body National Association of Software and Services Companies (NASSCOM) has projected that India's Information and Technology (IT) industry is expected to grow at the slowest pace in nearly a decade, as clients defer spending in the face of geopolitical uncertainties. Software export growth in financial year 2017-18 is projected at 7-8% in constant currency terms, down from 8.6% in the fiscal 2016-17, in line with its forecast of 8-10%. In terms of the domestic market the body has said that there will be 10-11% growth from $24 bn in FY17 to $26-26.5 bn in FY18.

Noting that digital solutions and niche segments would be the key growth drivers, the industry’s representative body said the revenue projection was based on improvements in financial services and high potential in digital business. It also said that the fiscal year will see growth driven by the modernisation of operations for client firms and the adoption of new technologies such as SaaS (Software As A Service) applications, cloud platforms, BI (Business Intelligence), cognitive and embedded analytics as enterprise customers scale digital projects.

Though, allaying fears of slowdown and job losses, NASSCOM Chairman Raman Roy said that the industry was expected to add 1.3-1.5 lakh jobs during the fiscal as it continued to be a net hirer with the demand for skilled professionals growing across its segments. In a diversion from over dependence on US market, the industry body said that they are planning outreach activities in Japan, middle East, Africa and China with focus on digital solutions. The industry association, however, admitted that it was imperative for new and existing talent to reskill to prepare for emerging job roles which required new skillsets.

The CNX Nifty is currently trading at 9587.50, down by 42.50 points or 0.44% after trading in a range of 9585.15 and 9647.65. There were 13 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 0.74%, Sun Pharma up by 0.71%, Lupin up by 0.63%, Bharti Infratel up by 0.56% and Aurobindo Pharma up by 0.55%. On the flip side, Indian Oil Corporation down by 3.52%, Indiabulls Housing down by 2.98%, Hindalco down by 2.48%, Tata Steel down by 2.23% and Hero MotoCorp down by 1.76% were the top losers.

Asian markets were trading mixed; KOSPI Index rose 3.78 points or 0.16% to 2,374.15, Hang Seng advanced 12.57 points or 0.05% to 25,687.10 and Nikkei 225 was up by 28.27 points or 0.14% to 20,138.78.

On the flip side, Shanghai Composite decreased 23.23 points or 0.74% to 3,124.23, Taiwan Weighted shed 13.55 points or 0.13% to 10,385.51 and FTSE Bursa Malaysia KLCI was down by 0.69 points or 0.04% to 1,776.74.