Weak trade prevails in morning session

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 on account of buying of American currency by banks and importers. Brent crude oil prices were near 2015 highs after the unplanned closure of a major North Sea pipeline for repairs, knocking out significant supplies from a market that was already tightening due to OPEC-led production cuts. Foreign Portfolio Investors (FPIs) stood net sellers in secondary markets on Monday and sold shares worth Rs 629.16 crore with gross purchases and gross sales stood at Rs 6,167.15 crore and Rs 6,796.31 crore, respectively. Foreigners have offloaded shares worth of over Rs 4,000 crore from domestic equity markets this month so far on account of rising crude prices and widening fiscal deficit. Traders remained on sidelines ahead of Index of Industrial Production (IIP) data for October and inflation data based on consumer price index (CPI) for November to be released later in the day. A private poll showed that India’s retail inflation likely breached the central bank’s 4% medium-term target in November after unseasonably heavy rains sent food prices soaring. The poll enlightened that the higher inflation rate is unlikely to push the Reserve Bank of India (RBI) to change its key rate any time soon. Separately, with the farm loan waiver pitch getting shriller by the day, former RBI governor Y V Reddy has said that the practice is not good for economic or credit culture and insisted that ultimately it is a political decision and cannot be justified in the longer run.

Meanwhile, investors took note of ASSOCHAM report which enlightened that the government needs to accord top priority to agriculture in the budget as a major shortfall in kharif production resulted in sluggish growth of farm sector in the second quarter this fiscal. While the year-to-year agriculture GVA (Gross Value Addition) growth for the July-September quarter of 2017-18 dropped to 1.7% from 4.1%, measured on basic prices, the fall looks quite sharp at current prices from 10% to 3.7%. The chamber observed that the shortfall in the second leg of the monsoon seems to have impacted the Kharif production. The street shrugged off the United Nations report that India’s economy is likely to expand by 7.2% in 2018 and go up further to 7.4% in the following year on the back of strong private consumption, public investment and the ongoing structural reforms. Economic outlook for South Asia is seen largely favourable and steady for the short term, notwithstanding significant medium-term challenges, said the ‘World Economic Situation and Prospects 2018’ report unveiled by United Nations Department of Economic and Social Affairs.

Traders were seen piling up position in Metal, Consumer Durables and Energy stocks, while selling was witnessed in Telecom, Bankex and Power sector stocks. Mixed reactions were displayed in paper stocks on expectation of robust growth demand. As per the reports, experts estimate 12% and four to five per cent growth in demand for packaging and writing & printing paper, respectively, next year. Writing & printing paper continues to face margin pressure in cheaper shipments from Southeast Asia. In scrip specific development, Somany Ceramics was trading in green on launching a new product series in tiles ‘Glosstra Plus’ - India’s glossiest wall tiles post commissioning of a state of the art plant at Kassar (Haryana) having capacity to produce 4.5 million square meter per annum of 300 mm x 600 mm Glosstra Plus tiles. Asian Oilfield Services was trading in green on receiving Letter of Award for Hiring of Services for 3D Seismic Data Acquisition and Processing of 250 sq. km of Jaisalmer PML in Rajasthan for a period of 12 months at an estimated contract cost of Rs 69.01 crore.

On the global front, Asian markets were trading mostly in red. Large Japanese manufacturers turned more optimistic about economic conditions in the October-December quarter, in another upbeat sign for an economy on a record run of growth. The business survey index (BSI) of sentiment at large manufacturers stood at plus 9.7, up from plus 9.4 in July-September. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 33,400 and 10,300 levels respectively. The market breadth on BSE was negative in the ratio of 1032:1188, while 108 scrips remained unchanged.

The BSE Sensex is currently trading at 33341.39, down by 114.40 points or 0.34% after trading in a range of 33326.00 and 33458.41. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.33%, while Small cap index was down by 0.02%.

The top gaining sectoral indices on the BSE were Metal up by 0.98%, Consumer Durables up by 0.65%, Energy up by 0.31%, Basic Materials up by 0.19% and Healthcare up by 0.14%, while Telecom down by 1.58%, Bankex down by 0.86%, Power down by 0.72%, Realty down by 0.67% and FMCG down by 0.64% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 3.50%, ONGC up by 1.79%, Reliance Industries up by 1.10%, Lupin up by 0.95% and Maruti Suzuki up by 0.64%.

On the flip side, Bharti Airtel down by 1.68%, Asian Paints down by 1.50%, ITC down by 1.30%, Bajaj Auto down by 1.24% and TCS down by 1.11% were the top losers.

Meanwhile, as part of pre-budget consultations with the Finance Minister Arun Jaitley, economists have suggested a range of measures, including increasing social security pension. The other major suggestion were, giving more remunerative prices to farmers keeping the inflation target in mind, announcing a road map for tax reforms in the Union Budget 2018-19 and providing more incentives for infrastructure investment as well as to small and medium enterprises and construction sector.
Noted economist Jean Dreze said “The amount (for social security pension) has been Rs 200 per month. This is totally unacceptable. There is no reason to keep it so low. So, make it at least Rs 500, I would say even Rs 1,000, if possible and increase the coverage”.

Besides, some economist also recommended imposition of long term capital gains tax on equity, adding interest rate also figured during the meeting along with rural distress and job creation. Economists also urged lowering the corporate tax rate to 20 per cent with removal of exemptions, they also proposed that the government should announce a fresh roadmap for GST including the convergence of rates.

The meeting, besides Jaitley was also attended by top finance ministry officials, including Finance Secretary Hasmukh Adhia, Chief Economic Adviser Arvind Subramanian, Expenditure Secretary A N Jha and Financial Services Secretary Rajiv Kumar, while the economists included Surjit S Bhalla MD, OXUS Investment, Ajit Ranade, Chief Economist, Aditya Birla Group, Majoj Pant, Director, IIFT, Arvind Virmani, President, Forum for Strategic Initiative, Shekhar Shah, Director General, NCAER.

The CNX Nifty is currently trading at 10274.90, down by 47.35 points or 0.46% after trading in a range of 10271.70 and 10326.10. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 3.42%, GAIL India up by 2.47%, Vedanta up by 2.45%, ONGC up by 1.79% and Hindalco up by 1.51%.

On the flip side, HPCL down by 3.21%, Indian Oil Corporation down by 2.36%, Bharti Infratel down by 2.34%, BPCL down by 1.96% and Eicher Motors down by 1.90% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 132.63 points or 0.46% to 28,832.66, Nikkei 225 decreased 76.33 points or 0.33% to 22,862.40, Taiwan Weighted decreased 40.65 points or 0.39% to 10,432.44, Shanghai Composite decreased 19.07 points or 0.57% to 3,303.13 and KOSPI Index decreased 14.13 points or 0.57% to 2,457.36.

On the other hand, Jakarta Composite increased 1.26 points or 0.02% to 6,027.89 and FTSE Bursa Malaysia KLCI increased 1.58 points or 0.09% to 1,721.05.