Benchmarks continue weak trade in morning session

Indian equity benchmarks continued their weak trade in morning session on account of selling in frontline blue chip counters. The rupee opened down breaching the 65 mark for the first time since November 21 last year. Foreign Portfolio Investors (FPIs) net sold shares worth Rs 1,214.18 crore on Wednesday, showed provisional data. Domestic Institutional Investors (DIIs) bought shares worth a net Rs 1,375.48 crore. Foreign institutional investors are increasing their bearish bets on Indian equities amid rising uncertainty over macro-economic indicators and worries over depleting credit quality of banks.

The sentiments remained under pressure on report that minutes from the Reserve Bank of India’s meeting this month showed monetary policy committee members expressing concerns about accelerating inflation, although that was also tempered by uncertainty about the strength of an economic recovery. Separately, the country’s investment climate during April-December period of this fiscal looks subdued with declining figures in announcements of new projects and the number of projects under execution. According to data by the Centre for Monitoring Indian Economy (CMIE), the value of investment in new projects during April-December was Rs 4.43 trillion, less than half of Rs 9.21 trillion in the comparable period of last fiscal. Moreover, the value of projects completed at Rs 2.83 trillion was down by 35.3 per cent from Rs 4.38 trillion in the year ago period.

Meanwhile, investors took note that Foreign Direct Investment (FDI) in India grew marginally by 0.27 percent to $35.94 billion during the first nine months of the current fiscal year 2017-18. According to data released by the Department of Industrial Policy and Promotion (DIPP), the country has received $35.84 billion FDI during April-December 2016-17. The street shrugged off report that India’s Gross Domestic Product (GDP) growth in the third quarter of the current fiscal is likely to be in the range of 6.5-7 per cent and may expand further in following three months. The country’s GDP grew by 6.3 per cent in July-September quarter of the fiscal, up from 5.7 per cent in the first quarter. The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. February 2018 series to next month i.e. March 2018 series. The near month February 2018 derivatives contracts will expire today i.e. February 22, 2018.

On sectoral front, majority of fertilizers stocks were trading under pressure on ICRA’s report that DBT will negatively impact fertilizer industry’s working capital cycle in the near term. The report highlighted that owing to the large subsidy backlog, inadequate subsidy provisioning in the Union Budget as well as shifting of subsidy realization from point of dispatch to point of retail sale, the implementation of DBT is likely to have a negative impact on the working capital cycle of the fertilizer industry in the near term. The Direct Benefit Transfer (DBT) was recently rolled out on a pan India basis from February 1, 2018 after completion of the pilot stage that was implemented across 19 districts.

Traders were seen buying in IT, TECK and Healthcare stocks, while selling was witnessed in Oil & Gas, Energy and PSU sector stocks. In scrip specific development, Religare Enterprises was trading in red on report that Price Waterhouse (PW) is in the line of fire over its auditing of the company, after the financial services company’s new auditor said its predecessors had submitted an unmodified report. When an auditor files an unmodified report, it is certifying that the company’s financials were fairly and accurately presented.

On the global front, Asian markets were trading mostly in red as speculation of faster hikes in US interest rates soured risk appetite globally. The dollar held onto most of its overnight gains courtesy of higher Treasury yields, though the sudden shift to safety spurred demand for the Japanese yen. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 33,800 and 10,400 levels respectively. The market breadth on BSE was negative in the ratio of 936:1300, while 118 scrips remained unchanged.

The BSE Sensex is currently trading at 33745.11, down by 99.75 points or 0.29% after trading in a range of 33691.56 and 33817.09. 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 0.17%, while Small cap index was down by 0.11%.

The only gaining sectoral indices on the BSE were IT up by 0.73%, TECK up by 0.33% and Healthcare up by 0.01%, while Oil & Gas down by 1.49%, Energy down by 1.06%, PSU down by 0.90%, Telecom down by 0.69% and Auto down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.12%, Adani Ports & Special Economic Zone up by 1.05%, IndusInd Bank up by 0.68%, Tata Steel up by 0.68% and Infosys up by 0.57%.

On the flip side, ONGC down by 2.00%, Asian Paints down by 1.62%, Dr. Reddy’s Lab down by 1.58%, Hindustan Unilever down by 1.06% and Coal India down by 1.01% were the top losers.

Meanwhile, Foreign Direct Investment (FDI) in India grew marginally by 0.27 percent to $35.94 billion during the first nine months of the current fiscal year 2017-18. According to data released by the Department of Industrial Policy and Promotion (DIPP), the country has received $35.84 billion FDI during April-December 2016-17. However, in rupee terms, FDI inflows dropped by 4 percent to Rs 231,457 crore during the first nine months of FY18, as compared to Rs 240,385 crore in the same period of FY17.

During the first nine months of the current financial year, the sectors which attracted maximum inflows were services, telecommunications, computer software & hardware and construction activities. Services contributed around 17% to total inflows with an investment of $4.62 billion, followed by telecommunications and computer software & hardware which contribute 8% each with investment of $6.13 billion and $5.15 billion, respectively and finally construction activities contributing around 3% ($2.5 billion). Besides, India received maximum FDI from countries including Mauritius with investment of $13.34 billion, followed by Singapore $9.21 billion and Netherlands $2.38 billion.

Foreign investments are considered crucial for India, which needs around $1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth. A strong inflow of foreign investments will help improve the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.

The CNX Nifty is currently trading at 10358.55, down by 38.90 points or 0.37% after trading in a range of 10340.65 and 10365.05. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 1.81%, HCL Tech up by 1.57%, Tech Mahindra up by 1.23%, Adani Ports & Special Economic Zone up by 0.94% and Sun Pharma up by 0.79%.

On the flip side, BPCL down by 4.46%, ONGC down by 2.37%, Bharti Infratel down by 2.12%, Asian Paints down by 1.68% and Dr. Reddy’s Lab down by 1.66% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 318.59 points or 1.01% to 31,113.30, Nikkei 225 decreased 219.61 points or 1% to 21,751.20, Taiwan Weighted decreased 66.77 points or 0.62% to 10,647.67, Jakarta Composite decreased 27.93 points or 0.42% to 6,615.47, KOSPI Index decreased 17.59 points or 0.72% to 2,412.06 and FTSE Bursa Malaysia KLCI decreased 1.35 points or 0.07% to 1,856.82.

On the other hand, Shanghai Composite increased 59.65 points or 1.86% to 3,258.81.