Indian bourses continue to trade under pressure

Indian bourses continued their weak trade in afternoon session on account of selling witnessed in front line blue chip stocks. The sentiments also remained sluggish with Fitch Ratings’ statement that high debt burden of the government constrains India’s rating upgrade, after Finance Minister Arun Jaitley projecting a fiscal deficit of 3.5 per cent of GDP against the earlier target of 3.2 per cent. Some caution also prevailed in the markets ahead of Reserve Bank of India’s monetary policy review on February 7. Investors failed to take any sense of relief from private survey showing that activity in India’s services sector grew at the fastest pace in three months in January, underpinned by a recovery in new orders that prompted companies to sharply increase hiring. Moreover, negative global cues along with selling continued in Capital Goods, Basic Materials, Banking and Consumer Durables stocks, pulled the equity indices lower. Broader indices too were reeling under pressure. In scrip specific development, GMR Infrastructure was up by around four and half percent with arm inking agreement to acquire 11% stake in GMR Hyderabad International Airport (GHIAL).  On the global front, Asian markets were trading mostly in red, following deep losses on Wall Street last week after a strong US jobs report and rising Treasury yields fanned fears of interest rate hike quicker than thought.

Back home, the BSE Sensex is currently trading at 34749.76, down by 316.99 points or 0.90% after trading in a range of 34520.80 and 34844.99. 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 0.73%, while Small cap index was down by 1.07%.

The top gaining sectoral indices on the BSE were Telecom up by 1.72%, Utilities up by 0.57%, Power up by 0.55%, PSU up by 0.32% and Oil & Gas up by 0.05%, while Capital Goods down by 2.10%, Basic Materials down by 1.43%, Bankex down by 1.23%, Consumer Durables down by 1.08% and Consumer Disc down by 0.98% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.58%, Tata Motors up by 2.27%, Power Grid up by 2.08%, Tata Motors - DVR up by 1.89% and ITC up by 1.63%. On the flip side, HDFC down by 4.16%, Larsen & Toubro down by 2.51%, Indusind Bank down by 2.28%, Hindustan Unilever down by 1.90% and Adani Ports &SEZ down by 1.89% were the top losers.

Meanwhile, the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a post-Budget paper has said that the Reserve Bank of India (RBI) should not overreact to the high yield pressures of the bond market, along with the government promising a substantial revision in the Minimum Support Price (MSP) for farmers and it should refrain from hiking the benchmark policy lending rates in its sixth bi-monthly monetary policy statement for 2017-18. He also said that some of the macro indicators, including pegging of higher fiscal deficit of 3.3% for FY19 and 3.5% of the GDP for the current fiscal, look difficult, but reaction of the bond market to the budget-related would ease out soon.

ASSOCHAM has said that the worries over the minimum support price (MSP) leading to increase in retail inflation are exaggerated as there is no MSP for the vegetables at the ground level. It also said that for ‘Operation Greens’ for onion and potato, announced in the Budget, entire institutional mechanism would have to be worked out by the Niti Aayog along with the states, so is the situation with regard to the MSP for several other agri commodities. It noted that while the Niti Aayog and the states would bear in mind the farmers’ interest, the institutional mechanism would surely strike a balance between remuneration to the growers as also the impact on the retail prices. So, it added that the immediate fear may be an over-reaction and the RBI should not get influenced while fixing the Repo (policy lending) rates.

Talking about stock market valuations seeing a decline, the industry chamber said that it is a healthy correction which was overdue. It also said that a lot of froth and unnecessary exuberance had gathered around the stocks, particularly in the mid-cap space and there was no justification while matched against the corporate earnings. It pointed out that while the government has realised this fact, it is time RBI joined the initiative by ensuring that the growth which seems visible, should be encouraged by at least not revising the interest rates upward.

The CNX Nifty is currently trading at 10674.00, down by 86.60 points or 0.80% after trading in a range of 10586.80 and 10695.55. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 4.71%, Tata Motors up by 2.54%, Power Grid up by 1.84%, ITC up by 1.63% and Coal India up by 1.60%. On the flip side, HDFC down by 3.58%, Indusind Bank down by 2.87%, Larsen & Toubro down by 2.69%, Bajaj Finance down by 2.42% and Adani Ports &SEZ down by 1.99% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 592.45 points or 2.55% to 22,682.08, Hang Seng was down by 388.66 points or 1.19% to 32,213.12, Taiwan Weighted shed 179.98 points or 1.62% to 10,946.25, Jakarta Composite declined 34.89 points or 0.53% to 6,593.93, KOSPI Index decreased 33.64 points or 1.33% to 2,491.75 and FTSE Bursa Malaysia KLCI dropped 17.1 points or 0.91% to 1,853.38.

On the flip side, Shanghai Composite was up by 11.46 points or 0.33% to 3,473.54.