Benchmarks turn choppy ahead of September F&O expiry

Indian equity benchmarks have made a cautious start and are trading choppy in early deals on Thursday, as traders remained on sidelines ahead of September F&O expiry later in the day. Traders also remained concerned with India Ratings’ report that India’s GDP growth estimate for the ongoing financial year 2017-18 is likely to come down to 6.7 per cent from 7.4 per cent earlier as “the combined effect of demonetisation and introduction of goods and services tax (GST) is proving to be more disruptive for the economy than was expected earlier”. However, losses remained capped with traders taking some solace with Prime Minister Narendra Modi’s statement that traders across the country are 'positive' about GST and accepting the new taxation arrangement but they need 'handholding' so that their problems can be resolved. He urged the chief secretaries to use the district administration in this regard, so that small traders are facilitated to access and adopt the new system.

On the global front, most of the Asian counters were trading in red at this point of time, as investors began to assess the implications of the much-anticipated tax proposal. The Japanese market was though trading in green as the yen weakened against dollar on optimism over the health of the U.S. economy. The US markets showed some recovery and ended higher in the last session with the tech heavy Nasdaq outperforming its other counterparts.

Back home, telecom stocks remained buzzing, as the Communications Minister Manoj Sinha has said that  the telecom industry is expected to generate revenue of $38.25 billion by 2017-end, registering a compounded annual growth rate of 5.2 percent between 2014 and 2017. Meanwhile, the market breadth indicating the overall health of the market was strong, with 1,184 shares gaining and 680 shares declining, while a total of 101 shares were unchanged.

The BSE Sensex is currently trading at 31196.65, up by 36.84 points or 0.12% after trading in a range of 31081.83 and 31222.07. There were 16 stocks advancing against 15 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 0.39%.

The top gaining sectoral indices on the BSE were Metal up by 1.15%, Realty up by 0.78%, Basic Materials up by 0.66%, FMCG up by 0.62% and Healthcare was up by 0.55%, while Oil & Gas down by 1.26%, Energy down by 0.65%, Consumer Durables down by 0.50%, TECK down by 0.34% and IT was down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.49%, Cipla up by 1.31%, Dr. Reddy’s Lab up by 1.21%, Coal India up by 1.00% and Tata Steel up by 0.95%. On the flip side, Asian Paints down by 2.43%, TCS down by 0.65%, Tata Motors - DVR down by 0.63%, Hindustan Unilever down by 0.51% and ONGC down by 0.50% were the top losers.

Meanwhile, going in line with other predictions, the credit rating agency India Ratings has said that India’s GDP growth estimate for the ongoing financial year 2017-18 is likely to come down to 6.7 per cent from 7.4 per cent earlier as “the combined effect of demonetisation and introduction of goods and services tax (GST) is proving to be more disruptive for the economy than was expected earlier.

As per the report of the agency, taking out the high denomination currency while failing to remonetise the economy quickly has in many cases proved fatal for the unorganised sector/small and medium enterprise where business transactions are heavily cash dependent, as these enterprises have still not been able to recover fully, their pain is finding a reflection in overall economic growth. It added that although the roll out of GST was fairly smooth and the first month revenue collections were encouraging, some stress points have emerged.

Though, it also said that some of the initiatives/ reform measures taken by the government recently such as insolvency and bankruptcy code, corporate debt restructuring mechanism, re-capitalisation of banks, GST etc. have the potential to improve the fundamentals of the Indian economy, but their impact will be visible only in the medium to long term.

It further said that overall, the current economic landscape is not very encouraging - index of industrial production grew at a dismal 1.2 per cent in July 2017, bank credit is showing no signs of a pick-up, consumer price index based inflation at 3.6 per cent in August 2017 is a five-month high, current account deficit at 2.4 per cent of GDP in 1QFY18 is a four-year high.

The CNX Nifty is currently trading at 9726.10, down by 9.65 points or 0.10% after trading in a range of 9687.55 and 9742.95. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were ACC up by 1.90%, Dr. Reddy’s Lab up by 1.45%, ITC up by 1.45%, Hindalco up by 1.37% and Vedanta up by 1.37%. On the flip side, Asian Paints down by 2.54%, Indian Oil Corporation down by 2.44%, BPCL down by 2.19%, GAIL India down by 2.16% and Eicher Motors down by 1.61% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 86.21 points or 0.31% to 27,556.22, Jakarta Composite slipped 4.45 points or 0.08% to 5,858.57, Shanghai Composite shed 3.09 points or 0.09% to 3,342.19, FTSE Bursa Malaysia KLCI dipped 1.35 points or 0.08% to 1,762.89 and KOSPI Index was down by 0.51 points or 0.02% to 2,372.06.

On the flip side, Taiwan Weighted increased 1.75 points or 0.02% to 10,328.43 and Nikkei 225 was up by 115.77 points or 0.57% to 20,382.82.