Indian equities remain in red terrain

Indian equity benchmarks continued their trade in red territory in early afternoon session, as investors adopted a cautious approach in view of January derivatives expiry. Subdued trend in Asian markets and continues selling in PSU, IT and TECK stocks, weighed on the sentiments. The sentiments also remained sluggish with the report that India is among the bottom five countries on the Environmental Performance Index (EPI) 2018, plummeting 36 places from 141 in 2016. However, losses were limited as traders took some support with private report stating that waning effects from the GST impact will help push the Indian GDP growth to 7 per cent in FY19. The report further noted that the growth has slid from previous year’s 7.1% to 6.5% in FY18 due to the implementation of the GST. But as some of the short-run disruptions caused by GST got ironed out, the firm expects growth to rise in the next couple of years. In scrip specific development, Wipro was up by over half a percent with its wholly owned subsidiary - Wipro LLC planning to invest $9.9 million in Harte Hanks.

On the global front, Asian markets were trading mostly in red, on concerns about the Trump administration's protectionist stance cast a shadow on financial markets. Back home, the BSE Sensex is currently trading at 36044.92, down by 116.72 points or 0.32% after trading in a range of 36017.48 and 36247.02. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.21%, while Small cap index was down by 0.17%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.08%, Metal up by 0.74%, Industrials up by 0.54%, Basic Materials up by 0.14% and Power up by 0.06%, while PSU down by 1.12%, IT down by 0.85%, TECK down by 0.77%, Oil & Gas down by 0.60% and Realty down by 0.58% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 1.83%, ICICI Bank up by 1.50%, Larsen & Toubro up by 1.34%, Axis Bank up by 1.00% and Wipro up by 0.97%. On the flip side, SBI down by 4.07%, Dr. Reddy’s Lab down by 2.49%, Yes Bank down by 1.64%, TCS down by 1.37% and Infosys down by 1.36% were the top losers.

Meanwhile, the Finance Ministry has said that the additional expenditure of Rs 80,000 crore towards recapitalisation of public sector banks (PSBs) through bonds, as part of Rs 2.11 trillion capital support over two years, will not have an impact on fiscal deficit as they will be cash neutral. Besides, Economic Affairs Secretary S C Garg has noted that these bonds will have 10-15 year tenure and will not have statutory liquidity ratio (SLR) status.

Garg has stated that there is no fiscal impact of bond issuance to banks. He also said that these will be swap deals and cash neutral, and there is not going to be a public issue. He also pointed out that the additional expenditure of Rs 80,000 crore towards bank recapitalisation through issue of government securities will be matched by additional receipts on issues of securities to the banks and will not entail any cash outgo. Talking about the pricing, he said that it would be three months average price of government securities plus the spread.

Earlier, in October, Finance Minister Arun Jaitley had announced an unprecedented Rs 2.11 lakh crore, 2-year road map to strengthen PSBs, reeling under high non-performing assets (NPAs) or bad loans. Their NPAs have increased from Rs 2.75 lakh crore in March 2015 to Rs 7.33 lakh crore as on June 2017. The plan included floating re-capitalisation bonds of Rs 1.35 lakh crore and raising Rs 58,000 crore from the market by diluting government's stake. He had also announced that there would be front loading of re-capitalisation bonds.

The CNX Nifty is currently trading at 11051.80, down by 34.20 points or 0.31% after trading in a range of 11047.10 and 11095.60. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 1.93%, Coal India up by 1.92%, Vedanta up by 1.72%, Larsen & Toubro up by 1.39% and ICICI Bank up by 1.37%. On the flip side, SBI down by 4.44%, Dr. Reddy’s Lab down by 2.52%, Yes Bank down by 1.70%, UPL down by 1.49% and Bajaj Finance down by 1.45% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 271.29 points or 1.13% to 23,669.49, Hang Seng was down by 136.52 points or 0.41% to 32,822.17, Jakarta Composite dropped 11.64 points or 0.18% to 6,603.85 and Shanghai Composite dipped 8.13 points or 0.23% to 3,551.33.

On the flip side, FTSE Bursa Malaysia KLCI increased 3.46 points or 0.19% to 1,840.50, Taiwan Weighted was up by 13.79 points or 0.12% to 11,165.95 and KOSPI Index added 24.23 points or 0.95% to 2,562.23.