Markets continue weak trade in late morning session

Key Indian benchmarks remained sluggish in late morning session, following a cautious stance adopted by participants ahead of the two-day policy review by RBI starting today. Adding some anxiety, the Nikkei India Services Purchasing Managers' Index dipped into negative territory in November, in the first contraction in three months, as the country continued to reel from the effects of the new goods and service tax- GST. The seasonally adjusted business activity index stood at 48.5 in November, off from 51.7 in October. Sentiments were also downbeat as global rating agency, Fitch Ratings in its latest report cut the country's GDP growth forecast for the current fiscal to 6.7 per cent from the earlier projected 6.9 per cent, saying the rebound was weaker than expected. Besides, sluggish cues from Asian markets along with weakness in broader markets, also weighed on the markets. Traders failed to get relief from SBI research’s latest report stating that the significant rise in fund raising through the IPO is likely to spur credit growth in some of the sectors.

On the global front, Asian markets were trading mostly in red, reflecting weakness in technology stocks after the Nasdaq pulled back overnight. Investors are also cautious after talks between British Prime Minister Theresa May and European Commission President Jean-Claude Juncker failed to reach an agreement on the terms of Brexit. Back home, in scrip specific development, Steel Strips Wheels (SSWL) traded in green after the company bagged another Exports order for supply of Steel wheels for EU Caravan market.

The BSE Sensex is currently trading at 32747.42, down by 122.30 points or 0.37% after trading in a range of 32682.52 and 32830.91. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.18%, while Small cap index was down by 0.47%.

The  top gaining sectoral indices on the BSE were Realty up by 0.49%, Telecom up by 0.45%, Energy up by 0.39% and TECK up by 0.06%, while Power down by 1.21%, Capital Goods down by 1.08%, Metal down by 1.06%, Utilities down by 1.02% and Consumer Durables down by 0.98% were the  top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.06%, Bharti Airtel up by 0.61%, Infosys up by 0.55%, Sun Pharma up by 0.52% and TCS up by 0.46%. On the flip side, Power Grid Corporation down by 2.41%, ONGC down by 1.96%, Wipro down by 1.67%, Hero MotoCorp down by 1.60% and Tata Steel down by 1.56% were the top losers.

Meanwhile, asserting that the rebound in India's gross domestic product (GDP) growth rate in September quarter was weaker than expected, global ratings agency, Fitch Ratings in its latest report has trimmed its growth forecast for 2017-18 to 6.7% from 6.9% predicted in its September Global Economic Outlook (GEO). It also slashed the FY19 forecast to 7.3% from its earlier projection of 7.4%. The country's economic growth accelerated to 6.3% in the July-September quarter of fiscal year 2017-18 (Q2FY18), from a three-year low of 5.7% in the April-June quarter, as manufacturing revved up and businesses adjusted to the new GST tax regime.

According to the rating firm, growth has repeatedly disappointed in recent quarters, partly because of one-off factors including the demonetisation programme of November 2016 and disruptions related to the implementation of the Goods and Services Tax (GST) in July 2017. However, it expects that the country’s economic growth will pick up in the next two years on back of gradual implementation of the structural reform agenda and higher real disposable income. It also expects that recent moves by the government should help support the growth outlook and enhance business confidence.

The US-based ratings agency further said that the two-year bank recapitalisation plan of Rs 2.1 lakh crore, or 1.4% of GDP, is likely to help address the capital shortages that have hindered the banks' lending capacity. It also stated that the Rs 6.9 lakh crore, or 4.5% of GDP, road construction plan may encourage the investment growth outlook. As per the report, inflation still running at low levels on muted food prices and rupee appreciating quite sharply against the US dollar since the beginning of this year give headroom for the RBI to keep interest rates quite low in order to help lift the economy. It added that pick-up in global growth has been better than expected and went on to project 3.2% expansion this year and 3.3% next year.

The CNX Nifty is currently trading at 10089.95, down by 37.80 points or 0.37% after trading in a range of 10069.10 and 10119.20. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.03%, Reliance Industries up by 0.93%, Indusind Bank up by 0.78%, Bharti Airtel up by 0.73% and Sun Pharma up by 0.48%. On the flip side, Power Grid Corporation down by 2.59%, Eicher Motors down by 2.58%, ONGC down by 2.26%, Tata Steel down by 1.68% and Dr. Reddy’s Lab down by 1.62% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 138.5 points or 0.48% to 28,999.78, Taiwan Weighted decreased 100.75 points or 0.95% to 10,550.36, Nikkei 225 decreased 39.43 points or 0.17% to 22,667.73, Jakarta Composite decreased 17.52 points or 0.29% to 5,980.67, Shanghai Composite decreased 5.13 points or 0.15% to 3,304.49 and FTSE Bursa Malaysia KLCI decreased 0.28 points or 0.02% to 1,712.85.

On the flip side, KOSPI Index increased 5.86 points or 0.23% to 2,507.53.