Weak global cues drag markets lower in early deals

Indian equity benchmarks have made a gap-down start and are trading with a cut of over half a percent in early deals, taking negative lead from global markets. Traders also remained on sidelines keeping an eye on the monsoon session of Parliament, which is expected to be stormy. There was some concern with the industry body Associated Chambers of Commerce & Industry of India’s (ASSOCHAM) latest report stating that the inflation outlook is expected to remain quite muted at least till festival season of Durga Puja and Diwali. Traders shrugged off private survey stating that Indian CEOs are confident about the growth prospects of the country over the next three years, compared to that of global economy.

On the global front, Asian markets were trading mostly in red at this point of time on concern that the U.S. health-care reform bill is effectively dead in its current form, casting a cloud on President Donald Trump’s broader economic revitalization agenda. The US markets ended mostly in red in the last session.

Back home, stocks related to cigarette space remained under pressure, as the GST Council raised the cess on cigarettes to take away an estimated Rs 5,000 crore annual ‘windfall’ manufacturers could have reaped from lower GST rates. However, the telecom stocks remained on buyers’ radar, as the Telecom Minister Manoj Sinha said that the Communications Ministry will 'analyse' the impact of Goods and Services Tax on telecom subscribers, and approach the Finance Ministry in case consumers or players face “genuine problems”.

The BSE Sensex is currently trading at 31883.04, down by 191.74 points or 0.60% after trading in a range of 31626.44 and 31911.61. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; both BSE Mid cap index and Small cap index were up by 0.13%.

The top gaining sectoral indices on the BSE were IT up by 1.00%, TECK up by 1.00%, Telecom up by 0.98%, Auto up by 0.82% and Healthcare up by 0.67%, while FMCG down by 5.47%, Energy down by 0.88%, Oil & Gas down by 0.49%, Consumer Durables down by 0.39% and Metal down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Cipla up by 1.86%, Bharti Airtel up by 1.54%, Hindustan Unilever up by 1.32%, Sun Pharma up by 1.30% and TCS up by 1.29%. On the flip side, ITC down by 11.51%, Reliance Industries down by 1.67% and Coal India down by 0.22% were the top losers.

Meanwhile, with India set to reap a record foodgrains production and the industry not enjoying any pricing power, the industry body, Associated Chambers of Commerce & Industry of India (ASSOCHAM) in its latest report has stated that the inflation outlook is expected to remain quite muted at least till festival season of Durga Puja and Diwali.

The association noted that there could be some disruption for one or two vegetable items such as tomatoes, having seen crop damage, but overall, the situation is going to remain quite comfortable for the consumers at least till October-November. Floods in some parts of the country, may also play a spoilsport. However, a vigil needs to be maintained for ensuring that farmers are protected from the market distortions and the procurement agencies like the Food Corporation of India and other government wings both at the Central and the State levels along with the cooperatives like NAFED  are fully geared to lift the farm produce in time and at remunerative rates.

According to the ASSOCHAM, the last three months have witnessed a dramatic fall in the WPI inflation from 5.11% in March to less than one per cent in June. The impact of bumper foodgrains and the entire cereals production is clearly visible. With the wheat harvest and arrivals of the new crop began from April, the wheat inflation saw a sharp drop from 11.33% in February, then to 6.33% in March and to 0.29% in June this year on an annualized basis. It noted that the biggest contributors to a sharp fall in inflation are the vegetable prices which have dropped by over 21% in June, 2017 year on year and added that the inflation should start reviving in the next few months.   

The industry body further said that the concept of e-platforms for the farm produce is excellent, but the same needs to be given a big push by the state governments, disallowing those middle men who may not be happy to shift to the transparent system of mandi operations. He also said the fact the inflation for manufactured food has dropped from a double digit to just about 3% clearly reflects easing of the raw material costs for the food processing firms thanks to abundant supply of farm produce.

The CNX Nifty is currently trading at 9876.40, down by 39.55 points or 0.40% after trading in a range of 9792.05 and 9885.35. There were 42 stocks advancing against 8 stocks declining, while 1 scrip remained unchanged on the index.

The top gainers on Nifty were ACC up by 2.11%, Bharti Airtel up by 1.84%, Cipla up by 1.74%, Yes Bank up by 1.58% and Eicher Motors up by 1.46%. On the flip side, ITC down by 11.26%, Reliance Industries down by 1.79%, GAIL India down by 1.51%, Aurobindo Pharma down by 0.97% and Hindalco down by 0.69% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 111.74 points or 0.56% to 20,007.12, Hang Seng slipped 43.31 points or 0.16% to 26,427.27, Jakarta Composite shed 21.1 points or 0.36% to 5,820.18, Shanghai Composite dropped 19.71 points or 0.62% to 3,156.76, KOSPI Index decreased 1.6 points or 0.07% to 2,423.50 and FTSE Bursa Malaysia KLCI was down by 1.36 points or 0.08% to 1,753.83. On the flip side, Taiwan Weighted was up by 3.56 points or 0.03% to 10,461.10.