Benchmarks erase losses to end flat

Indian equity benchmarks ended the session flat with negative bias on Tuesday, as traders remained on sidelines ahead of the September F&O expiry later this week. Markets made a cautious start and extended their southward movement, as traders opted to offload risky bets amid 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. Sentiments also remained dampened after the Asian Development Bank (ADB) trimmed its growth forecast for South Asia to 6.7 percent this year and 7.0 percent next year, compared with estimates of 7.0 percent and 7.2 percent made in July. India’s growth was seen at 7.0 percent and 7.4 percent for this year and next, weaker than the July forecasts of 7.4 percent and 7.6 percent. ADB added that long-term interest rates in many Asian economies are closely linked to those in the US, policymakers need to strengthen their financial positions further and monitor debt levels and asset prices.

Domestic bourses even went to test their 31,500 (Sensex) and 9,800 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trim most of their losses to end flat, as investors continued hunt for fundamentally strong stocks. 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. Some support also came with Finance Minister Arun Jaitley’s statement that the government was in the process of undertaking measures to change the environment and provide a boost to the Indian economy.

Firm trade in European counters too aided sentiments with CAC and DAX trading in green terrain, erasing their initial losses. According to a report, hopes for higher wage growth across Britain are receding, apart from in a few sectors of the labor market that suffer from acute skill shortages.  Asian markets closed mostly in red on reports of rising tensions between North Korea and the United States.

Back home, auto stocks remained on buyers’ radar, 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. However, oil marketing companies and aviation stocks remained under pressure, following sharp rally in crude oil prices in international markets.

Finally, the BSE Sensex slipped 26.87 points or 0.08% to 31,599.76, while the CNX Nifty was down by 1.10 points or 0.01% to 9871.50.

The BSE Sensex touched a high and a low of 31,693.59 and 31,455.65, respectively and there were 14 stocks on gaining side as against 17 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.44%, while Small cap index was up by 1.08%.

The top gaining sectoral indices on the BSE were Realty up by 2.64%, Metal up by 2.49%, Basic Materials up by 1.20%, Industrials up by 0.47% and Healthcare was up by 0.28%, while Telecom down by 1.14%, FMCG down by 0.37% and TECK was down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 4.32%, Tata Steel up by 2.19%, Axis Bank up by 1.82%, Lupin up by 1.40% and Hero MotoCorp up by 1.39%. On the flip side, Hindustan Unilever down by 2.31%, Asian Paints down by 2.28%, Dr. Reddy’s Lab down by 2.10%, TCS down by 1.33% and Mahindra & Mahindra down by 1.06% were the top losers.

Meanwhile, India’s total production of Kharif Foodgrains, comprising rice, pulses and coarse cereals, is estimated to decline by 2.78 percent to 134.67 million tonnes (MT) in the kharif season of 2017-18 (ending October), mainly on account of poor rains as well as floods in some parts of the country. The country had produced a record 138.52 MT in the kharif season of 2016-17 on good monsoon rains.

According to the first advance estimates by the Agriculture Ministry for the year, in cash crops, production of cotton, oil seeds and jute is estimated to fall and that of sugarcane to go up. Cotton output is estimated to be slightly lower at 32.27 million bales (of 170 kg each) in the 2017-18 crop year (July-June) from the earlier 33.09 million bales. Oilseed output is estimated to be down at 20.68 MT compared to 22.40 MT in the year- ago period. However, sugarcane output might rise to 337.69 MT, from 306.72 MT before.

As per the data, rice output for the season is estimated to fall by 1.9 MT to 94.48 MT, from the record 96.39 MT in the previous kharif. Similarly, the total production pulses could drop to 8.71 MT, from the record 9.42 MT, due to depressed prices and poor rains. Besides, the production of tur is estimated to be lower at 3.99 MT from 4.78 MT, while urad output may rise to 2.53 MT from 2.17 MT in the last kharif season. Besides, coarse cereal output is also seen lower at 31.49 MT, against 32.71 MT in the gone-by kharif season and maize output is pegged at 18.73 MT this kharif as against 19.24 MT a year ago. At the same time, soyabean output has been pegged at 12.22 MT as against 13.79 MT last kharif.

The CNX Nifty traded in a range of 9,891.35 and 9,813.00. There were 22 stocks in green as against 28 stocks in red, while 1 scrip remained unchanged on the index.

The top gainers on Nifty were Vedanta up by 3.54%, ONGC up by 3.34%, Indiabulls Housing Finance up by 2.95%, Tata Steel up by 2.38% and Axis Bank up by 2.19%. On the flip side, BPCL down by 3.88%, Bharti Infratel down by 3.82%, Tata Power down by 2.44%, Hindustan Unilever down by 2.42% and Asian Paints down by 2.08% were the top losers.

European markets were trading mostly in green; France’s CAC rose 3.73 points or 0.07% to 5,270.86 and Germany’s DAX was up by 27.96 points or 0.22% to 12,622.77, while UK’s FTSE 100 was down by 1.5 points or 0.02% to 7,299.79.

Asian equity markets ended mostly lower on Tuesday as investors adopted a cautious stance amid heightened tensions surrounding the Korean Peninsula. North Korea's top diplomat said on Monday that a weekend tweet by US President Donald Trump will be counted as a declaration of war and North Korea has the right to take counter measures, including shooting down US bombers, even in international space. Japanese shares slipped from a two-year high as a stronger yen weighed on exporters and tech stocks also moved lower, tracking losses among their US peers overnight. Prime Minister Shinzo Abe said at a news conference Monday that he will dissolve the lower house of parliament on Thursday and call a snap election for next month. The minutes from the Bank of Japan's July monetary policy committee meeting showed that policymakers like to stick with their current policy framework despite the recent developments in consumer inflation being relatively weak. Overseas economies are growing steadily, leading to a bump in exports, the minutes added. Meanwhile, Chinese shares steadied in thin activity, after three days of losses, as investors sought beaten-down property developers and resource firms.