Benchmarks trade in red; RBI rate decision eyed

Indian equity benchmarks continued their weak trade in the morning session on account of selling in frontline blue chip counters. The rupee opened lower against dollar amid a caution ahead of the RBI monetary policy decision. Foreign Portfolio Investors stood net sellers in secondary markets on Tuesday and sold shares worth Rs 244 crore with gross purchases and gross sales stood at Rs 4,011.46 crore and Rs 4,255.51 crore, respectively. Traders remained cautious ahead of RBI monetary policy outcome. There are expectations that the RBI may keep interest rates unchanged on Wednesday, citing concerns about inflation and fiscal deficit. The sentiments were also dampened after National Council of Applied Economic Research (NCAER) enlightened that India Inc’s confidence dived due to Goods and Services Tax (GST) trouble in the second quarter (July-September) of the current financial year. Its Business Confidence Index (BCI) fell 12.9% from the earlier quarter, while year-on-year, the index fell 11.1%. The report added that there was deterioration in political sentiment during October, over July, with its Political Confidence Index (PCI) showing a quarter on quarter (q-o-q) fall of 12.4%. The significant downturn in sentiment during the September quarter reflected disquiet in the business sector from the ongoing GST transition.

Investors took note that the public debt of the central government rose by 2.53% to Rs 65.65 lakh crore in the July-September quarter compared to the previous quarter. Internal debt constituted 93% of public debt at end-September 2017, while marketable securities accounted for 82.6% of the public debt. The downside, was however, capped on private report that the level of optimism among India’s chief financial officers for the October-December period has seen an improvement and this in turn will translate to an uptick in capex as well as other investments. The Composite CFO Optimism Index for the fourth quarter of this year increased 3.1% over the July-September quarter. Select stocks from leather, textiles, agriculture products and carpets industry were buzzing after yesterday the government announced incentives worth a total Rs 8,450 crore to boost exports and employment in labour-intensive sectors in the mid-term review of the five-year foreign trade policy (FTP) that was rolled out in 2015. Incentives under the Merchandise Export from India Scheme (MEIS) have been raised to 4% from 2% for leather, textiles, agriculture products and carpets.

Traders were seen piling up position in Energy, Realty and IT stocks, while selling was witnessed in Metal, Basic Materials and Bankex sector stocks. In scrip specific development, aviation stocks were trading in green on International Air Transport Association (IATA) report that with rising air passenger numbers, as much as 1% of the global GDP - translating into $861 billion - is projected to be spent on air transport in 2018. Separately, rating agency ICRA reported that the domestic airlines industry is expected to trim its aggregate net loss by up to 90% to Rs 100 crore in FY18 from around Rs 1,000 crore a year-ago period aided by expected strong peak season demand in the remaining half of this fiscal.

On the global front, Asian markets were trading mostly in red, dragged by losses on Wall Street as the technology sector stuttered yet again after a brief rebound, while the dollar sagged on lower long-term US yields. Bank of Japan board member Takako Masai advocated sticking with ultra-easy monetary policy due to uncertainty over how fast inflation will rise, while warning that the central bank should remain on guard against the possible side-effects. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 32,800 and 10,100 levels respectively. The market breadth on BSE was positive in the ratio of 1300:850, while 103 scrips remained unchanged.

The BSE Sensex is currently trading at 32719.75, down by 82.69 points or 0.25% after trading in a range of 32693.20 and 32804.75. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.04%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Energy up by 0.63%, Realty up by 0.43%, IT up by 0.32%, Consumer Durables up by 0.31% and TECK up by 0.23%, while Metal down by 1.61%, Basic Materials down by 0.54%, Bankex down by 0.44%, Auto down by 0.38% and PSU down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.48%, Infosys up by 0.57%, Cipla up by 0.55%, Lupin up by 0.23% and NTPC up by 0.20%.

On the flip side, Tata Steel down by 1.67%, SBI down by 1.35%, Bajaj Auto down by 1.24%, ITC down by 0.83% and Hero MotoCorp down by 0.79% were the top losers.

Meanwhile, the newly-constituted 15th Finance Commission headed by NK Singh held its first meeting and decided to involve think-tanks in drawing up its report that will primarily deal with devolution of revenue between the Centre and states. It was keen to seek academic inputs and inter-actions with leading Think Tanks and domain knowledge experts which would assist the Commission in its work.

The commission has called upon to hold wide-ranging consultations with all stakeholders including various Ministries of the Union Government, all State Governments, Local Bodies, Panchayats and Political parties of each State Government. Also, the Commission recognised that there was need to undertake analytical papers, analysis from leading research organisations within the country and elsewhere to suitably address the Terms of Reference.

The meeting which was attended by all the other Members of the Commission i.e. Shaktikanta Das and Anoop Singh, as well as the part time Members Ashok Lahiri and Ramesh Chand, held preliminary discussions on the terms of reference for the Fifteenth Finance Commission. Its terms of reference also include proposing measurable performance-based incentives for states on efforts made by them in various fields including expansion and deepening of tax net under GST, achievements in implementation of flagship central schemes and disaster resilient infrastructure, reaching sustainable development goals, and quality of expenditure.

The CNX Nifty is currently trading at 10084.90, down by 33.35 points or 0.33% after trading in a range of 10074.45 and 10104.20. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 1.15%, Tech Mahindra up by 1.10%, Infosys up by 0.57%, Cipla up by 0.56% and HCL Tech up by 0.50%.

On the flip side, Hindalco down by 2.65%, Vedanta down by 2.43%, Tata Steel down by 1.70%, Bajaj Auto down by 1.39% and SBI down by 1.30% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 460.02 points or 1.59% to 28,382.78, Nikkei 225 decreased 452.69 points or 2% to 22,169.69, Taiwan Weighted decreased 172.69 points or 1.63% to 10,394.16, KOSPI Index decreased 31.19 points or 1.24% to 2,478.93, Shanghai Composite decreased 26.11 points or 0.79% to 3,277.56 and FTSE Bursa Malaysia KLCI decreased 5.03 points or 0.29% to 1,719.81.

On the other hand, Jakarta Composite increased 39.6 points or 0.66% to 6,040.07.