Benchmarks extend losses; Sensex holds 36,000 mark

Indian equity benchmarks extended their losses in morning session on account of selling in front line blue chip counters, as Bears tightened their grip over Dalal Street. The rupee showed its softer side by opening down against the dollar after the Economic Survey said a pause in fiscal consolidation cannot be ruled out. Besides, the increased month-end demand from banks and importers and a weak opening in the domestic equity markets also weighed on the domestic unit. Foreign Portfolio Investors were net buyers buying shares worth Rs 1,298.87 crore on January 29.

Sentiments were dampened as the street took note of yesterday’s Economic Survey, while painting a bright picture for India’s short and medium term growth, pointed out some pitfalls. It enlightened that despite better-than-expected GST revenue growth, India is headed for some fiscal slippage and could miss the target of 3.2% of GDP. The survey also added that agriculture income may fall by up to 25% in the medium term because climate change will hit crop yields, making it imperative to replace power and fertilizer subsidies by direct income support and to drastically expand irrigation. Investors took note of Chief Economic Adviser Arvind Subramanian’s statement that the scope for the Reserve Bank of India (RBI) to lower interest rate may be limited with growth picking up and inflation hardening. He added however that it would be inappropriate for him to comment on rate cut as it is the domain of the RBI.

Traders were seen piling up position in Oil & Gas, PSU and Telecom stocks, while selling was witnessed in Basic Materials, Metal and Capital Goods sector stocks. In scrip specific development, Amber Enterprises was trading in green after debuting on the exchange. The appliance maker had a very successful initial public offering (IPO), registering a subscription of 165 times. It had sought to raise Rs 600 crore through the issue, which opened on January 17 with a price band of Rs 855-859 apiece. MOIL was trading in green as the company is mulling buyback of its equity shares. The meeting of board of directors of the company will be held on February 05 to consider the proposal for buy back of the fully paid-up equity shares of the company.

On the global front, the Asian markets were trading in red. Labor demand in Japan rose in December to its highest in more than 40 years, which could help workers pressing for bigger pay increases at annual wage negotiations and push stubbornly slow consumer price growth towards policymakers’ inflation target. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 36,000 and 11,050 levels respectively. The market breadth on BSE was negative in the ratio of 582:1838, while 112 scrips remained unchanged.

The BSE Sensex is currently trading at 36067.34, down by 215.91 points or 0.60% after trading in a range of 36034.40 and 36291.82. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.64%, while Small cap index was down by 1.02%.

The few gaining sectoral indices on the BSE were Oil & Gas up by 0.80%, PSU up by 0.58%, Telecom up by 0.24% and Energy up by 0.05%, while Basic Materials down by 1.22%, Metal down by 1.21%, Capital Goods down by 1.01%, Healthcare down by 0.97% and Industrials down by 0.89% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.99%, ONGC up by 0.90%, NTPC up by 0.85%, Hero MotoCorp up by 0.70% and Bharti Airtel up by 0.45%.

On the flip side, Asian Paints down by 2.37%, Wipro down by 1.75%, Axis Bank down by 1.57%, Larsen & Toubro down by 1.42% and Coal India down by 1.31% were the top losers.

Meanwhile, as the government has done well on disinvestment and non-tax revenue collections, the NITI Aayog Vice Chairman Rajiv Kumar has said that the fiscal deficit target for 2017-18 may see only a slight slippage. He also said that the glide path to reduce fiscal deficit could change and government may settle for slightly higher fiscal deficit in 2018-19 as well. Besides, the government is aiming to restrain the fiscal deficit for 2017-18 to 3.2% of the Gross Domestic Product (GDP), and 3% in 2018-19.

Kumar said “There could be a fiscal deficit slippage in 2017-18 but not much, I can’t see it slipping very much because government has done lot on disinvestment front and on non tax revenue front”. He added that the glide path could change. Therefore, they might expect slightly higher fiscal deficit target for 2018-19 as well.

NITI Aayog Vice Chairman further said that going forward, tax revenue will be optimistic. Talking about the oil prices, he said “I am afraid, we will have to take the pain. Listing of a very large oil company may be one of the reasons of high oil prices. Also, government is working to reduce our dependence on petroleum product”.

The CNX Nifty is currently trading at 11051.15, down by 79.25 points or 0.71% after trading in a range of 11042.10 and 11121.10. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were HPCL up by 2.41%, BPCL up by 1.95%, SBI up by 1.84%, GAIL India up by 0.96% and ONGC up by 0.90%.

On the flip side, Asian Paints down by 2.09%, Eicher Motors down by 2.02%, Coal India down by 1.66%, Hindalco down by 1.64% and Ambuja Cement down by 1.61% were the top losers.

The Asian markets were trading in red; Nikkei 225 decreased 321.93 points or 1.36% to 23,307.41, Hang Seng decreased 273.46 points or 0.83% to 32,693.43, Taiwan Weighted decreased 114.51 points or 1.02% to 11,107.30, Jakarta Composite decreased 101.85 points or 1.52% to 6,578.77, KOSPI Index decreased 27.44 points or 1.06% to 2,570.75, Shanghai Composite decreased 26 points or 0.74% to 3,497.00 and FTSE Bursa Malaysia KLCI decreased 2.84 points or 0.15% to 1,867.68.