Markets end lower on disappointing trade balance data

Friday turned out to be a dismal day of trade for Indian equity benchmarks, with frontline gauges ending with a cut of around a percent, as disappointing trade balance data and worries over the Rs 11,300 crore fraud case at PNB kept the underlying sentiment cautious. Markets started the session on an optimistic note but failed to gain any momentum and entered into red terrain, as traders turned pessimistic on report that India’s merchandise trade deficit for January widened from a year ago. The visible trade deficit increased to a 56-month high of $16.30 billion in January from $9.90 billion in the same month last year as export growth slowed down and imports of precious stones and crude oil surged. Exports grew an annual 9.07 percent, while imports jumped 26.10 percent. Sentiments also remained dampened on report that the growth of India’s debt capital markets moderated by three percent in the current year with a growth of 16 percent in the value of corporate bonds outstanding by December end, driven by a slowdown in bond issuance. Meanwhile, IMF said that the tax collection assumptions in India’s budget is ambitious but there is a need to look into the fiscal implications of some of the initiatives that are presently unfunded.

The market participants also remained worried, as the World Bank identified two global risks that could jeopardise the country’s progress towards a global middle-class status. These two risks are anti-international trade sentiment and climate change. The World Bank further noted that India’s services exports are being challenged and the climate change is posing threat to the agricultural sector. Meanwhile, Road Transport and Highways Minister Nitin Gadkari stated that the government would not bring any separate electric vehicle policy and would just frame rules for the category. Separately, Union minister D V Sadananda Gowda has said that the government will change the base year to 2017-18 for the calculation of GDP and IIP numbers while for retail inflation the year will be revised to 2018.

On the global front, European markets were trading in green in early deals, as investors shrugged off the possibility of more interest rate hikes from the Federal Reserve and turned their focus to encouraging earnings news. Most Asian indices were shut on Friday due to Lunar New Year holidays. However, Japan’s Nikkei edged higher by over a percent after the government nominated Haruhiko Kuroda to serve a second five-year term as the head of the Bank of Japan, a signal that easy monetary policies will continue.

Back home, global index provider MSCI has slammed Indian exchanges’ decision to terminate licensing and data-feed agreements with their global counterparts. On the sectoral front, banking stocks edged lower with media reports suggesting that as many as 17 banks lent about Rs 3,000 crore to various firms of Nirav Modi, the man at the center of the alleged $1.77 billion banking fraud at PNB. In scrip specific development, PNB continued to remain under pressure after Enforcement Directorate reportedly told that PNB fraud is bigger than Rs 11,000 crore. Enforcement Directorate is likely to soon get in touch with other banks involved.

Finally, the BSE Sensex declined 286.71 points or 0.84% to 34,010.76, while the CNX Nifty was down by 93.20 points or 0.88% to 10,452.30.

The BSE Sensex touched a high and a low of 34,508.24 and 33,957.33, respectively and there were 6 stocks on gaining side as against 25 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.20%, while Small cap index was down by 1.22%.

The lone gaining sectoral index on the BSE was IT up by 0.07%, while Auto down by 1.65%, Metal down by 1.58%, PSU down by 1.57%, Telecom down by 1.51% and Realty was down by 1.44% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.14%, Infosys up by 0.96%, Dr. Reddy’s Lab up by 0.83%, Asian Paints up by 0.73% and TCS up by 0.18%. On the flip side, SBI down by 2.55%, Yes Bank down by 2.52%, ICICI Bank down by 2.31%, Maruti Suzuki down by 2.00% and Bharti Airtel down by 1.94% were the top losers.

Meanwhile, NITI Aayog CEO Amitabh Kant has asserted that there is no need to frame and implement a comprehensive electric vehicle (EV) policy as an action plan has been prepared. He also said that instead of trapping technology in rules and regulations, focus should be on promoting new innovations. This announcement has come as a sigh of relief for automakers who bat against government stringent policy on transitioning India into electric vehicles nation.

Kant has stated that day-to-day technological innovations are taking place in the automobile sector. He also said that they are making an action plan on electric vehicles which will be given to all ministries and they will monitor it. Adding further, he said that technology is always ahead of rules and regulations, and it becomes difficult to change rules and regulations. He mentioned that future will be shared economy, future will be connected economy and the future will zero-based emission policy.

Meanwhile, Road Transport and Highways Minister Gadkari has said that the government has already taken many decisions on electric vehicles and the charging stations at NITI Aayog can charge different vehicles manufactured by Tata, Mahindra, Nissan or others. Besides, government think-tank NITI Aayog in a joint report with Rock Mountain Institute has stated that accelerated adoption of more electric and shared vehicles could result in saving as much as $60 billion in diesel and petrol costs along with cutting down as much as 1 gigatonne (GT) of carbon emissions by 2030.

The CNX Nifty traded in a range of 10,612.90 and 10,434.05. There were 9 stocks in green as against 41 stocks in red on the index.

The top gainers on Nifty were Ambuja Cement up by 1.22%, Kotak Mahindra Bank up by 0.95%, Infosys up by 0.92%, Asian Paints up by 0.84% and Dr. Reddy’s Lab up by 0.74%. On the flip side, Eicher Motors down by 3.31%, Indiabulls Housing Finance down by 3.30%, Tech Mahindra down by 3.26%, SBI down by 2.62% and Yes Bank down by 2.44% were the top losers.

European markets were trading in green; France’s CAC surged 50.03 points or 0.96% to 5,272.55, UK’s FTSE 100 increased 54.89 points or 0.76% to 7,289.70 and Germany’s DAX was up by 128.1 points or 1.04% to 12,474.27.

The only major Asian market trading today ‘Japanese stock exchange’ ended in green on Friday after US shares extended their winning streak to five sessions overnight, shrugging off concerns over inflation and higher interest rates. Japanese shares saw a relief rally after the government nominated Haruhiko Kuroda to serve a second five-year term as the head of the Bank of Japan, a signal that easy monetary policies will continue. Trading volumes remained thin across Asia as markets in China, Hong Kong, Indonesia, Malaysia, Singapore, South Korea and Taiwan remained closed for the Lunar New Year holiday. Chinese markets are closed till February 21.

Nikkei 225 gained 255.27 points or 1.19% to 21,720.25.