Feeble global cues drag benchmarks lower in early deals

Indian equity benchmarks made a pessimistic start and are trading in red terrain in early deals on Wednesday, with frontline gauges declining below their crucial 10,400 (Nifty) and 33,800 (Sensex) levels amid weak global cues. Traders remained concerned on report that the Reserve Bank of India (RBI) is unlikely to reduce key policy rates in 2018 despite a dip in retail inflation in February. Risks like the higher minimum support prices (MSPs) for food grains promised in the budget, according to them, can push up the inflation in the next fiscal year. Traders shrugged off report highlighting that revival in rural demand, increased infrastructure spending is likely to drive India's growth in current year, even as increasing debt and trade protectionism could pose a challenge. The report added that, “showing signs of recovery, the Indian economy recorded a five-quarter high growth of 7.2 per cent in the October-December period on good showing by key sectors like agriculture, construction and manufacturing.”

Global cues too remained sluggish with Asian markets trading in red terrain at this point of time, following the sacking of U.S. Secretary of State Rex Tillerson, and amid talk of potential U.S. tariffs against China. The US markets closed lower on Tuesday amid renewed geo-political concerns after President Donald Trump fired Secretary of State Rex Tillerson.

Back home, the Centre has released Rs 28,398 crore as GST compensation to states for July-December, with Karnataka getting a major pie. The government has lowered the indirect tax revenue collection forecast in the revised estimates by Rs 51,856 crore to Rs 8.75 lakh crore in the current fiscal. As per the Budget estimates, over Rs 9.26 lakh crore was to be collected from indirect taxes. Textile stocks remained buzzing on report that the Textiles Ministry should impress upon the Finance Ministry to reconsider the overall GST structure for textiles sector and impose higher anti-dumping duty to protect the domestic industry.

The BSE Sensex is currently trading at 33753.18, down by 103.60 points or 0.31% after trading in a range of 33690.61 and 33800.04. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.16%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were IT up by 0.50%, TECK up by 0.26%, Consumer Durables up by 0.24%, Capital Goods up by 0.23% and Healthcare was up by 0.22%, while Telecom down by 0.92%, Bankex down by 0.69%, Energy down by 0.53%, PSU down by 0.52% and Oil & Gas was down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 0.68%, Dr. Reddys Lab up by 0.45%, Infosys up by 0.32%, Larsen & Toubro up by 0.30% and Asian Paints up by 0.29%. On the flip side, ICICI Bank down by 1.22%, Bharti Airtel down by 1.19%, Adani Ports down by 1.17%, Hero MotoCorp down by 1.03% and Axis Bank down by 1.03% were the top losers.

Meanwhile, days after the Trump administration hiked import tariffs on steel and aluminium products, the Commerce and Industry Minister Suresh Prabhu has said that India will take up this issue with the US authorities. He said that the measures are unfortunate and they will take up these issues with US counterpart and added that he will try to explain to them the necessity for working together through multilateral trading platform as well as bilateral trading platform.

Prabhu further stated that the idea of the meeting is to create an atmosphere, so that this negativity around global trade and multilateral trading system should reduce and all the countries should benefit from open trade. As India exports steel and aluminium products worth about $1.3 billion a year to America, the ministry is studying the impact of duty hike. Exports of these products to the American market will become expensive and could impact the competitiveness of domestic items, with hike in tariffs by the US government.

Major steel exporters to the US comprise Canada, Brazil, South Korea, Mexico and Russia which together account for close to 60% of the shipments, while India exported close to 0.9 MT steel to America in 2017. Besides, triggering fears of a global trade war, the US President Donald Trump had signed two proclamations that impose 25% tariff on imported steel and 10% on aluminium, but exempted Canada and Mexico and offered the possibility of excluding other allies, backtracking from an earlier no-exceptions stance.

The CNX Nifty is currently trading at 10384.35, down by 42.50 points or 0.41% after trading in a range of 10371.10 and 10407.05. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 1.45%, GAIL India up by 1.29%, Ambuja Cement up by 1.19%, Ultratech Cement up by 0.85% and TCS up by 0.81%. On the flip side, BPCL down by 1.69%, Adani Ports down by 1.61%, Bharti Infratel down by 1.52%, ICICI Bank down by 1.46% and HPCL down by 1.41% were the top losers.

Asian markets are trading in red terrain; Hang Seng declined 395.14 points or 1.25% to 31,206.31, Nikkei 225 dropped 255.9 points or 1.16% to 21,712.20, Taiwan Weighted decreased 75.47 points or 0.68% to 11,020.16, Jakarta Composite shed 32.55 points or 0.51% to 6,380.29, Shanghai Composite fell 19.51 points or 0.59% to 3,290.72, KOSPI Index dipped 8.65 points or 0.35% to 2,485.84 and FTSE Bursa Malaysia KLCI down by 5.92 points or 0.32% to 1,858.11.