Markets trade at day’s low

Adding to the losses, key Indian equity benchmarks are trading near intraday low points in late morning session, on the back of heavy selling in Consumer Durables, Healthcare and Capital Goods stocks. Traders were cautious with Chief Economic Adviser Arvind Subramanian’s statement that elevated stock prices are a matter of concern and could correct sharply if they are not backed by growth, requiring ‘heightened vigilance’. Investors remained on sidelines ahead of upcoming union budget, scheduled to be released on February 1, 2018. In line with larger peers, the broader markets also trading lower, with BSE Mid cap index falling more than 0.80%. On the sectoral front, airline companies stocks were trading in red, despite global ratings agency, Fitch Ratings’ report stating that the central government’s initiatives like the regional air connectivity ‘Udan’ scheme should be favourable for demand growth and competition.

On the global front, Asian markets were trading mostly in green, despite US stocks fell overnight for a second straight session. Investors kept an eye on US President Donald Trump's upcoming State of the Union address and the Federal Reserve's monetary policy announcement due later in the day. Back home, in scrip specific development, Steel Strips Wheels (SSWL) traded higher after the company bagged another exports order from US Truck & Trailer aftermarket for its Truck Steel Wheels plant in Chennai.

The BSE Sensex is currently trading at 35906.78, down by 126.95 points or 0.35% after trading in a range of 35894.66 and 36047.67. 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 0.83%, while Small cap index was down by 0.13%.

The top gaining sectoral indices on the BSE were Realty up by 0.94%, Telecom up by 0.85%, Energy up by 0.31%, Oil & Gas up by 0.16% and Metal up by 0.16%, while Consumer Durables down by 0.98%, Healthcare down by 0.93%, Capital Goods down by 0.75%, FMCG down by 0.57% and IT down by 0.56% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.50%, Bharti Airtel up by 0.94%, Reliance Industries up by 0.81%, Hero MotoCorp up by 0.62% and Asian Paints up by 0.48%. On the flip side, Dr. Reddy’s Lab down by 2.69%, Coal India down by 2.42%, ICICI Bank down by 2.31%, Hindustan Unilever down by 2.01% and Sun Pharma down by 1.52% were the top losers.

Meanwhile, a joint study carried out by the industry body Associated Chambers of Commerce & Industry of India (ASSOCHAM) and rating agency CRISIL has stated that with a meagre 35% and 17% debt market penetration in Government securities (G-secs) and corporate bonds, India’s debt market significantly trailing those of the developed economies like the United States of America (USA) where it is 83% and 123% respectively. It added that Indian debt market also suffers from a skew towards sovereign paper, with G-secs (including treasury bills and state-development loans) accounting for three-fourths of the pie, while bank loans form predominant medium of corporate funding. It noted that corporate bond market has grown over the years, it is heavily tilted towards top-rated papers and the banking, financial services and insurance domains, both in primary and secondary segments.

According to the report, there is lack of participation, of both individual and institutional investors. While individual investors limit themselves to the most accessible bank fixed deposits (FDs), institutional investors, such as insurance and pension funds are restricted by regulatory constraints, especially in terms of preference to G-secs over bonds. As per the study, response of foreign portfolio investors (FPIs) has remained mixed, individual investors are warming up to debt investments evidently as their investments in debt mutual funds increased from Rs 74,386 crore as of March 2009 to Rs 3.63 lakh crore as of September 2017. Moreover, a slew of macroeconomic and regulatory developments have aided growth of debt market.

On the economic front, the study said that stable inflation, fiscal improvement, a stable currency and addressing of structural interest rate issues by linking transmission of interest rates to small savings instruments have helped. While it added that on the regulatory front the positives include - implementation of Insolvency and Bankruptcy Code (IBC), uniform bond valuation, standardisation of issuance/reissuance and electronic biddings, framework for large borrowers, additional norms for credit rating agencies and corporate bond repos.

Adding that bringing a higher share of people under organised sector employment, promotion of financial intermediation and measures to increase foreign investors into the debt market would spur its growth, it said that more needs to be done, in terms of investor awareness, development of new products and simplification of taxation structure. Highlighting the important role of debt market in the global economy, the study said it benefits all the three parties associated that is issuers, investors and regulator/environment.

The CNX Nifty is currently trading at 11014.90, down by 34.75 points or 0.31% after trading in a range of 11010.70 and 11058.50. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.14%, Kotak Mahindra Bank up by 1.67%, Indian Oil Corporation up by 1.37%, BPCL up by 1.21% and Bharti Airtel up by 0.84%. On the flip side, ICICI Bank down by 2.62%, Coal India down by 2.47%, Dr. Reddy’s Lab down by 2.37%, Hindustan Unilever down by 2.09% and Lupin down by 2.05% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 8.8 points or 0.34% to 2,576.54, Jakarta Composite increased 46.88 points or 0.71% to 6,622.37, Taiwan Weighted increased 56.79 points or 0.51% to 11,133.57 and Hang Seng increased 66.65 points or 0.2% to 32,673.94. On the flip side, Shanghai Composite decreased 5.43 points or 0.16% to 3,482.58 and Nikkei 225 decreased 0.93 points or 0% to 23,291.04.