Benchmarks slump in early deals as geopolitical concerns resurface

Indian equity benchmarks have made a gap-down opening and are trading with a cut of around a percent as geopolitical concerns back in again, hurting investors across the globe. Traders also remained on sidelines ahead of Opec and non-Opec nations meeting today to discuss a possible extension of oil supply cuts to support prices. Back on domestic turf, traders failed to get any sense of relief with report that the government is considering a plan to loosen the fiscal deficit target so that it could spend an additional Rs 500 billion ($ 7.7 billion) in the financial year ending in March 2018. Traders also paid no heed to reports that given the lack of considerable space both on the monetary and fiscal front to support economic growth, part of the country’s forex reserves can be used to support GDP numbers.

Global cues too remained somber, with all the Asian counters trading in red at this point of time on renewed geo-political worries after a report that North Korea could respond to fresh sanctions with a hydrogen bomb in the Pacific and on a downgrade to China's credit rating by S&P Global Ratings. The US markets turned mildly weak in the last session with the Dow and the S&P 500 pulling back off yesterday’s record closing highs.

Back home, selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include metal, basic material and banking. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 480 shares on the gaining side against 1,455 shares on the losing side while 80 shares remain unchanged.

The BSE Sensex is currently trading at 32130.68, down by 239.36 points or 0.74% after trading in a range of 32096.02 and 32342.81. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.05%, while Small cap index was down by 1.03%.

The top losing sectoral indices on the BSE were Metal down by 1.83%, Basic Materials down by 1.45%, Bankex down by 1.30%, PSU down by 1.20% and Capital Goods down by 1.19%, while there were no losing indices on the BSE sectoral front.

The top gainers on the Sensex were Sun Pharma up by 0.89%, Wipro up by 0.57%, Tata Motors up by 0.29%, Cipla up by 0.21% and Dr. Reddy’s Lab up by 0.18%. On the flip side, ICICI Bank down by 1.79%, Tata Steel down by 1.68%, Bajaj Auto down by 1.47%, Coal India down by 1.36% and SBI down by 1.36% were the top losers.

Meanwhile, predicting a strong global growth for the year 2017, World Bank President Jim Yong Kim has said that India has been growing ‘pretty robustly’ and called for more cooperation among the multilateral system, private sector and the governments to take advantage of the current win-win situation. He added that Japan, Europe and the US along with India were growing and there was a levelling-out in developing countries.

World Bank President has said that dormant capital will earn a higher return, where developing countries will have access to much more capital for the infrastructure needs, even for investing in health and education, investing in resilience to climate change and other factors. He noted that a country like India is growing pretty robustly, Japan is also growing and Europe is growing in a much more healthy way. Adding that the growth will be more robust this year, he further said that the United States continues to grow.

Kim has said that commodity importers were doing much better than commodity exporters, but that’s levelling out. So the growth is relatively more evenly distributed. He also said that in terms of indebtedness, the bank was watching very carefully the debt-to-GDP ratios of every single country. Besides, in June the World Bank had predicted a 7.2% growth rate for India in 2017 against 6.8% growth in 2016 and said that India remains the fastest growing major economy in the world.

The CNX Nifty is currently trading at 10032.90, down by 89.00 points or 0.88% after trading in a range of 10024.55 and 10095.05. There were 8 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 1.23%, Bharti Infratel up by 0.97%, Sun Pharma up by 0.91%, Wipro up by 0.45% and Tata Motors up by 0.23%. On the flip side, Yes Bank down by 2.82%, Hindalco down by 2.62%, Indiabulls Housing down by 2.03%, Vedanta down by 2.02% and Ultratech Cement down by 1.94% were the top losers.

Asian markets were trading in red; Hang Seng decreased 235.69 points or 0.84% to 27,874.64, Taiwan Weighted declined 113.52 points or 1.07% to 10,464.92, Nikkei 225 slipped 67.85 points or 0.33% to 20,279.63, KOSPI Index shed 19.38 points or 0.81% to 2,387.12, Shanghai Composite dropped 16.09 points or 0.48% to 3,341.72 and Jakarta Composite was down by 7.67 points or 0.13% to 5,898.90.