Benchmarks trade cautiously as North Korea tensions escalate

Indian equity benchmarks have made a cautious start and are trading slightly in red terrain in early deals on Tuesday, on backdrop of rising tensions in the Korean peninsula after North Korean Foreign Minister Ri Yong Ho claimed recent comments by President Donald Trump represent a declaration of war. Back on domestic front, traders remained on sidelines ahead of the September F&O expiry later this week. However, losses remained capped as traders took some solace with Prime Minister Narendra Modi constituting an Economic Advisory Council in a bid to bring in economic reforms. NITI Aayog member and a former professor at the Centre for Policy Research, Bibek Debroy has been appointed as Chairman of Economic Advisory Council. It will address issues of macroeconomic importance' and present its views to the prime minister.

Markets across the globe too were witnessing sluggish trend with all Asian markets, barring Shanghai Composite, trading in red terrain at this point of time after a fresh trigger from North Korea sent investors back into haven assets, with focus returning to comments from central bank policy makers. The US markets continuing their sluggish trend ended lower in the last session.

Back home, auto stocks remained in top gear, as the Road Transport and Highways Minister Nitin Gadkari hinted that automobile industry could continue exports of petrol and diesel cars even as government will go ahead with its plan to transition India to all-electric mobility by 2030. Meanwhile, the market breadth indicating the overall health of the market was strong, with 1,289 shares gaining and 539 shares declining, while a total of 69 shares were unchanged.

The BSE Sensex is currently trading at 31622.91, down by 3.72 points or 0.01% after trading in a range of 31567.51 and 31693.59. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.41%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Realty up by 1.69%, Metal up by 1.48%, Healthcare up by 0.96%, Basic Materials up by 0.77% and Oil & Gas was up by 0.63%, while FMCG down by 0.28% and Bankex was down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.25%, Sun Pharma up by 1.67%, Adani Ports up by 1.35%, Lupin up by 1.30% and Tata Steel up by 1.01%. On the flip side, Hindustan Unilever down by 2.11%, Asian Paints down by 1.69%, HDFC down by 0.99%, Dr. Reddys Lab down by 0.79% and Coal India down by 0.70% were the top losers.

Meanwhile, following complaints from the domestic steel industry, the government has initiated an anti-dumping probe on imports of straight length bars and rods of alloy steel from China. Six domestic companies, including JSW Steel, Sunflag Iron and Steel, Usha Martin and Gerdau Steel India, had submitted an application with the Directorate General of Anti-dumping and Allied Duties (DGAD) for initiation of anti-dumping investigation and imposition of the duty on these steel items exported from China.

The commerce ministry’s investigation arm - DGAD, at first glance, said that it has found sufficient evidence of dumping of these products from China. DGAD in its notification stated that the Authority has started investigating the alleged dumping and consequent damage to the domestic industry. In its investigation, the directorate will determine existence, degree and effect of alleged dumping and recommend the amount of anti-dumping duty, which if levied would be adequate to remove the injury to the domestic industry.

These steel products are used in various industries like automobiles, cement, power plants, turbines, shipbuilding, railway, capital goods, and construction machinery. The probation period for the current inquiry is 2016-17. However, for the loss of the domestic industry, the data for 2013-16 will also be taken for scrutiny. India’s exports to China were only $10.17 billion in 2016-17, but imports aggregated $61.28 billion in 2016-17.

Anti-dumping duties are levied to provide a level-playing field to the local industry by guarding against cheap below- cost imports. Increasing imports and dumping of goods from China have always been an area of concern for Indian companies. The DGAD is also probing dumping of several other products such as certain chemicals from the neighbouring country. India is one of the most attractive markets for global producers due to its large middle class population.

The CNX Nifty is currently trading at 9870.70, down by 1.90 points or 0.02% after trading in a range of 9846.55 and 9885.45. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.97%, Indiabulls Housing up by 2.36%, Vedanta up by 2.12%, Hindalco up by 1.77% and Sun Pharma up by 1.69%. On the flip side, Hindustan Unilever down by 2.18%, BPCL down by 1.94%, Asian Paints down by 1.63%, HDFC down by 1.03% and Dr. Reddys Lab down by 0.80% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 71.69 points or 0.35% to 20,325.89, Taiwan Weighted shed 24.57 points or 0.24% to 10,311.32, Jakarta Composite dropped 12.28 points or 0.21% to 5,882.33, Hang Seng slipped 8.47 points or 0.03% to 27,491.87, KOSPI Index declined 7.97 points or 0.33% to 2,372.43 and FTSE Bursa Malaysia KLCI was down by 7.24 points or 0.41% to 1,761.90. On the flip side, Shanghai Composite was up by 2.36 points or 0.07% to 3,343.90.