Benchmarks trade lower in early deals on feeble regional cues

Indian equity benchmarks made a sluggish start to the crucial week of F&O expiry and are trading in red in early deals on Monday amid weak regional cues. Sentiments also remained dampened with Standard & Poor’s decision of retaining its sovereign rating for India at BBB- with a stable outlook, dashing hopes of another upgrade after rival Moody’s lifted its rating by a notch after a gap of nearly 14 years. Traders also remained concerned with industry body Assocham’s statement that inflation would remain a key concern for the RBI and the government, dimming hopes of a cut in interest rates. Traders also remained on sidelines ahead of GDP and PMI data for the manufacturing sector due later this week. However, losses remained capped, as some solace came with Niti Aayog Vice Chairman Rajiv Kumar’s statement that the time has come for consolidation of reforms, including GST, bankruptcy code and benami law, initiated by the Modi government in the last 42 months to ensure that the steps deliver the 'desired fruits'.

On the global front, Asian markets were trading in red at this point of time, as investors turned their attention to U.S. tax reform ahead of a busy week with data on the health of the world’s biggest economies. The US markets made a positive closing in the last session; the strength partly reflects recent upward momentum, which helped to lift the major averages to new record closing highs earlier in the week.

Back home, broader markets were outperforming benchmarks with traders getting some support with Chief Economic Adviser (CEA) Arvind Subramanian’s statement that going forward the Goods and Services Tax (GST) may 'probably' have fewer rates by 'collapsing' 12 percent and 18 percent tax slabs into one. Stocks related to gems and jewellery segment remained in focus, as the commerce ministry is working on a package in consultation with the gems and jewellery industry to boost export and create jobs in this labour intensive sector.

The BSE Sensex is currently trading at 33597.42, down by 81.82 points or 0.24% after trading in a range of 33563.33 and 33661.33. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.17%, while Small cap index was up by 0.23%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.72%, Realty up by 0.57%, Capital Goods up by 0.44%, Consumer Discretionary Goods & Services up by 0.29% and Industrials was up by 0.18%, while PSU down by 0.45%, IT down by 0.42%, Oil & Gas down by 0.41%, Energy down by 0.36% and TECK was down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.22%, NTPC up by 0.97%, Larsen & Toubro up by 0.79%, Lupin up by 0.42% and Axis Bank up by 0.23%. On the flip side, Adani Ports down by 1.36%, Infosys down by 1.17%, Power Grid Corporation down by 1.04%, Hindustan Unilever down by 0.99% and SBI down by 0.80% were the top losers.

Meanwhile, citing low income levels, a sizeable fiscal deficit and high general government debt, global rating agency Standard and Poor's (S&P) has kept its India rating unchanged at the lowest investment grade of ‘BBB-’, with a stable outlook. It said that stable outlook reflects its view that over the next 2 year India’s growth will remain strong, it will maintain its sound external accounts position and added that fiscal deficits will remain broadly in line with their expectations. S&P last upgraded India’s sovereign rating to ‘BBB-’ from ‘BB+’ in January 2007.

Welcoming government’s reforms, including the rollout of GST and a planned $32 billion capital infusion into its struggling state-run lenders, the rating agency clarified that upward pressure on the ratings could build if the government’s reforms markedly improve its net general government fiscal deficit and lead to a reduction in the level of net general government debt. It also said that downward pressure on the ratings could emerge if gross domestic product (GDP)  growth disappoints, bringing about a reassessment of the view on trend growth; if net general government deficit rises significantly; or if the political will to maintain India’s reform agenda significantly loses momentum.

S&P reiterated its concerns about India’s GDP, per capita income, saying it was the lowest of all investment-grade sovereigns that they rate at an estimated $2,000. It projects India’s GDP growth to average 7.6% over 2017-2020. It also said ongoing expenditure pressure at both the central government and state levels will ensure fiscal consolidation remains slow. However, it said India’s external position is a strength given the rupee’s liquidity in international foreign exchange markets.

The CNX Nifty is currently trading at 10357.95, down by 31.75 points or 0.31% after trading in a range of 10348.05 and 10368.00. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were UPL up by 1.28%, ONGC up by 1.19%, Zee Entertainment up by 1.05%, NTPC up by 0.92% and Aurobindo Pharma up by 0.91%. On the flip side, HPCL down by 1.72%, Indian Oil Corporation down by 1.33%, Indusind Bank down by 1.17%, Bajaj Finance down by 1.16% and Infosys down by 1.11% were the top losers.

Asian markets were trading in red; Hang Seng decreased 128.87 points or 0.43% to 29,737.45, Taiwan Weighted dropped 84.34 points or 0.78% to 10,769.75, Nikkei 225 slipped 51.31 points or 0.23% to 22,499.54, KOSPI Index declined 31.94 points or 1.26% to 2,512.39, Shanghai Composite fell 27 points or 0.81% to 3,326.82, FTSE Bursa Malaysia KLCI dipped 3.11 points or 0.18% to 1,714.12 and Jakarta Composite was down by 1.65 points or 0.03% to 6,065.50.