Bourses erase gains to turn negative; Telecom declines most

The local equity benchmarks erased all of their gains in late afternoon session to turn negative, despite firm opening in European markets, with Sensex and Nifty falling below their physiological 33,800 and 10,350 levels, respectively. Selling spree continued in telecom index, followed by Realty and Capital Goods, while Mahindra & Mahindra and Sun Pharma declined the most by losing more than a percent each. Anxiety came among the investors with Icra’s report that the pace of growth in country's apparel exports will depend on the industry’s ability to wade through the new taxation and export incentive regime and intense global competition. Some concerns also came with a private report that deteriorating state government finances pose a risk to India, which already boasts the second-largest budget deficit among major economies. The markets failed to take further support with credit ratings agency, Crisil’s latest report that India’s gross domestic product (GDP) growth will improve sharply to 7.5% in the next fiscal year 2018-19 (FY19) and the country’s GDP will grow at the rate of 6.5% in the current fiscal year (FY18).

Meanwhile, the government will, on Wednesday, pitch for a sovereign rating upgrade with global agency Fitch, highlighting reform push in taxation and PSU banks and its plans to gradually lower government debt. On the sectoral front, metals stock were trading in green, despite a private report stating that export of steel to the US from various countries is likely to fall by 9-14 million tonne(MT) as Trump government decides to impose higher tariff on import of steel and aluminium.

On the global front, European markets were trading in green, as worries about an imminent trade war eased and investors seemed to have brushed off the inconclusive election result in Italy. Trade war fears appear to moderate as US President Donald Trump faces growing pressure from political and diplomatic allies to pull back from proposed steel and aluminum tariffs. Some market participants also view the tariff threats more as a negotiating tactic to get a better deal on NAFTA. Asian markets were also trading in green. Back home, in scrip specific development, Pritika Auto Industries jumped higher on signing an agreement with Amrit Duraparts to buy assets (Land, Building & Machinery) located at Village Simbli in the state of Punjab.

The BSE Sensex is currently trading at 33701.18, down by 45.60 points or 0.14% after trading in a range of 33700.71 and 34060.13. There were 13 stocks advancing against 17 stocks declining, while 1 stock remained unchanged on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.35%, while Small cap index was down by 0.13%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.12%, Oil & Gas up by 0.92%, Metal up by 0.49%, Basic Materials up by 0.37% and Energy up by 0.26%, while Telecom down by 0.51%, Realty down by 0.45%, Capital Goods down by 0.32%, Bankex down by 0.29% and Auto down by 0.22% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.62%, Adani Ports & SEZ up by 1.48%, Tata Steel up by 1.26%, HDFC up by 1.06% and Yes Bank up by 1.01%. On the flip side, Mahindra & Mahindra down by 1.75%, Sun Pharma down by 1.31%, ICICI Bank down by 1.19%, Tata Motors - DVR down by 0.93% and SBI down by 0.78% were the top losers.

Meanwhile, with an aim to address additional demand for liquidity and to provide flexibility to banks in its liquidity management towards March-end, India’s central banking institution, the Reserve Bank of India (RBI) has said that it will infuse adequate additional liquidity of Rs 1 lakh crore in the banking system during March 2018, through longer term variable rate repo operations.

The apex banking institution will go for a combination of appropriate instruments for adequate additional liquidity infusion, while continuing with its normal Liquidity Adjustment Facility (LAF) operations.  The RBI has decided to conduct additional variable rate repo operations for longer tenors after reviewing the current and evolving liquidity conditions in the banking system.

The RBI will conduct 4 variable rate term repo auctions for Rs 25,000 crore each on every Tuesday of March 2018. The tenors of additional variable rate repo operations will be in the range of 24-31 days. These auctions will be conducted in addition to the regular 14 day variable rate term repo auctions.

The CNX Nifty is currently trading at 10349.85, down by 9.00 points or 0.09% after trading in a range of 10343.25 and 10441.35. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.65%, Zee Entertainment up by 2.62%, Indian Oil Corporation up by 2.14%, Aurobindo Pharma up by 2.10% and Indiabulls Housing Finance up by 2.02%. On the flip side, Mahindra & Mahindra down by 1.89%, Sun Pharma down by 1.54%, UPL down by 1.43%, Bharti Infratel down by 1.43% and ICICI Bank down by 1.42% were the top losers.

Asian markets were trading in mostly in green; FTSE Bursa Malaysia KLCI increased 4.68 points or 0.25% to 1,847.30, Shanghai Composite increased 32.72 points or 1% to 3,289.64, KOSPI Index increased 36.35 points or 1.53% to 2,411.41, Taiwan Weighted increased 141.44 points or 1.33% to 10,784.34, Nikkei 225 increased 375.67 points or 1.79% to 21,417.76 and Hang Seng increased 624.34 points or 2.09% to 30,510.73. On the flip side, Jakarta Composite decreased 44.15 points or 0.67% to 6,506.44.

All European markets were trading in green; France’s CAC increased 29.42 points or 0.57% to 5,196.65, UK’s FTSE 100 increased 65.11 points or 0.91% to 7,181.09 and Germany’s DAX increased 127.7 points or 1.06% to 12,218.57.