Geo-political worries drag benchmarks lower in early deals

Indian equity benchmarks have made soft start and are trading in red terrain in early deals on Monday on increased geo-political worries. However, losses remained capped with traders taking some solace with chairman of the New Development Bank of BRICS, K.V. Kamath’s statement that demonetisation has proved to be good exercise for India, as it has achieved the goals of eliminating illicit and counterfeit cash from the economy. Meanwhile, the government, on the recommendations of the Goods and Services Tax Council, has waived the penalty of Rs 200 per day for taxpayers who failed to file the first GST returns within the deadline.

On the global front, Asian markets were trading mostly in red at this point of time as the geopolitical worries flared up, after North Korea tested a nuclear bomb on Sunday and US President Trump threatened to increase economic sanctions and halt trade with any nation doing business with Kim Jong Un’s regime. The US markets made a modestly higher closing in the last session despite disappointing monthly jobs data.

Back home, steel sector stocks are shining in morning trade, as Steel Minister Chaudhary Birender Singh has said to produce more special steel to cut imports. He said that PSUs should develop appetite for special steel as value addition remains the mantra for success. Meanwhile, Apex Frozen Foods made a stellar debut on the bourses today and are trading with a gain of around 20% at Rs 209.85 per share as against its issue price of Rs 175 per share.

The BSE Sensex is currently trading at 31852.09, down by 40.14 points or 0.13% after trading in a range of 31812.32 and 31932.20. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.22%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Metal up by 0.83%, Energy up by 0.75%, Oil & Gas up by 0.49%, PSU up by 0.42% and Auto up by 0.23%, while Telecom down by 0.39%, Bankex down by 0.21%, TECK down by 0.19%, Capital Goods down by 0.19% and IT down by 0.19% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.18%, Tata Motors up by 0.99%, Reliance Industries up by 0.98%, ONGC up by 0.81% and Maruti Suzuki up by 0.54%. On the flip side, Adani Ports down by 1.63%, Kotak Mahindra Bank down by 0.96%, Asian Paints down by 0.83%, Bharti Airtel down by 0.76% and Infosys down by 0.57% were the top losers.

Meanwhile, the Niti Aayog’s new Vice-Chairman Rajiv Kumar has expressed confidence that the Indian economy will grow by 7-7.5% in the second quarter (July-September) of fiscal year 2017-18. He added that growth will be supported by good monsoon and clarity over Goods and Services Tax (GST). India’s Gross Domestic Product (GDP) growth rate fell to a 3-year low of 5.7% in the first quarter (April-June), mainly on account of a slump in manufacturing.

Kumar said that demonetization impacted on growth in the first quarter as by then the currency shortage triggered by the scrapping of Rs 500 and Rs 1,000 notes on November 9 last year was over. He also noted that active de-stocking of inventory by the firms before the rollout of GST from July 1 was one of the reasons for a slowdown in production, which ultimately led to the tepid growth. He further said that restocking began after July, as there was more clarity on how the new indirect tax system will function and added that a good monsoon forecast and companies plan to list them on domestic bourses will indicate more capital formation and investment activity, and FDI and FIIs are also increasing.

Pitching for formulating a policy to generate employment, vice-chairman of the premier think-tank said that the country needs to develop an Indian model of development and growth. On the financial burden on states owing to farm-loan waiver, he said that it is ‘worrisome’ and farmers’ distress is a real phenomenon. He also advised the government to bring down its interventions, like export bans, in agriculture.

The CNX Nifty is currently trading at 9961.00, down by 13.40 points or 0.13% after trading in a range of 9950.05 and 9988.40. There were 22 stocks advancing against 28 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Coal India up by 1.82%, Indiabulls Housing up by 1.58%, BPCL up by 1.27%, Reliance Industries up by 1.02% and Tech Mahindra up by 0.94%. On the flip side, Adani Ports down by 1.85%, Indian Oil Corporation down by 1.78%, Ambuja Cement down by 1.22%, Tata Power down by 1.12% and Asian Paints down by 0.97% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 189.96 points or 0.96% to 19,501.51, Hang Seng shed 143.62 points or 0.51% to 27,809.54, Jakarta Composite fell 27.28 points or 0.47% to 5,836.78, KOSPI Index declined 20.37 points or 0.86% to 2,337.32 and Taiwan Weighted was down by 10.98 points or 0.1% to 10,583.84.

On the flip side, Shanghai Composite increased 4.66 points or 0.14% to 3,371.78 and FTSE Bursa Malaysia KLCI was up by 12.02 points or 0.68% to 1,773.16.