Feeble global cues drag benchmarks lower in early deals

Indian equity benchmarks have made a negative start and are trading slightly in red in early deals on Friday, as traders opted to book some of their profits off the table after two sessions of continuous rally. Feeble global cues too dampened sentiments with Asian markets trading weak after Wall Street ended sharply lower on Thursday, as disappointing labor market data clashed with the possibility of a more hawkish Federal Reserve, while rising tensions in the Korean peninsula providing additional pressure. However, losses remained capped as some solace came with report that net direct tax collection grew by 14.8 per cent to Rs. 1.42 lakh crore at the end of first quarter on account of surge in advance tax payments. As per the finance ministry the net direct tax collection represents 14.5 per cent of the total Budget Estimates of direct taxes of Rs 9.8 lakh crore for 2017-18.

Traders also took some relief with Finance Minister Arun Jaitley’s statement that the rollout of the Goods and Services Tax has been smooth, without causing much disruption. He said the economy has not been disrupted and we don’t expect any disruption ahead, refuting critics who had thought that the GST rollout would impact trade and industry. Meanwhile, the market breadth indicating the overall health of the market was strong, with 997 shares gaining and 894 shares declining, while a total of 97 shares were unchanged.

The BSE Sensex is currently trading at 31320.89, down by 48.45 points or 0.15% after trading in a range of 31309.91 and 31394.16. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.04%, however small cap index was up by 0.13%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.22%, Realty up by 0.72%, Capital Goods up by 0.15%, Power up by 0.07% and Telecom up by 0.05%, while Oil & Gas down by 0.43%, Consumer Durables down by 0.34%, FMCG down by 0.34%, Metal down by 0.26% and Energy down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 3.69%, Dr. Reddys Lab up by 1.95%, Mahindra & Mahindra up by 1.54%, Sun Pharma up by 1.05% and Cipla up by 0.94%. On the flip side, ICICI Bank down by 0.83%, HDFC down by 0.77%, Tata Motors down by 0.75%, ITC down by 0.74% and Asian Paints down by 0.68% were the top losers.

Meanwhile, the Fitch group company, BMI Research in its latest report has said that Indian economy may recover in the coming quarters and is likely to log a real Gross Domestic Product (GDP) growth of 6.9% in fiscal year 2017-18, though it also noted that real GDP growth slowed substantially to 6.1% year-on-year in Q4FY17. As per the report, India’s growth is expected to pick up after the impact of 2016 November's demonetisation drive, but debt-laden state-run banks will likely stop the recovery before its full potential.

BMI Research has said that the negative effects from the demonetisation measure is already wearing off, and the Indian economy will likely benefit from positive demographic trends, greater external stability (due to improved terms of trade from lower oil prices), and continued reforms that should help to improve the country’s admittedly poor business environment.

The report however stated that the public sector banking is still weak and plagued with mounting non-performing assets (NPAs), and it is likely to weigh on India’s growth potential. It further added that despite the Reserve Bank of India’s efforts to clean up these bad loans, these will likely take some time to be worked through the system, and therefore, credit allocation to the productive sectors of the economy is likely to be negatively affected.

The CNX Nifty is currently trading at 9,656.40, down by 18.15 points or 0.19% after trading in a range of 9653.00 and 9672.70. There were 24 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Lupin up by 3.77%, Dr. Reddys Lab up by 1.92%, Aurobindo Pharma up by 1.39%, Cipla up by 1.05% and Bharti Airtel up by 0.92%. On the flip side, Bharti Infratel down by 1.83%, HDFC down by 1.11%, Indian Oil Corporation down by 0.96%, GAIL India down by 0.95% and Ambuja Cement down by 0.90% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 95.02 points or 0.48% to 19,899.04, Hang Seng decreased 91.42 points or 0.36% to 25,373.80, Taiwan Weighted dropped 53.23 points or 0.51% to 10,314.97, FTSE Bursa Malaysia KLCI shed 7.69 points or 0.43% to 1,762.84, Shanghai Composite slipped 7.19 points or 0.22% to 3,205.25 and KOSPI Index was down by 6.75 points or 0.28% to 2,381.06.

On the flip side, Jakarta Composite was up by 3.78 points or 0.06% to 5,853.35.