Benchmarks trim losses in morning session

Indian equity benchmarks trimmed losses and continued their trade below neutral line in morning session on account of selling in frontline blue chip counters amid mounting investor’s concerns that growing trade tensions would hurt the global economy. US President Donald Trump has sought to impose fresh tariffs on China, intensifying fears of a trade war. The rupee depreciated against the US dollar in opening trade on fresh demand for the greenback from importers and banks. The sentiments were also dampened taking cues from yesterday’s election result prompting the BJP to admit that it badly underestimated the opposition’s electoral understanding. The BJP has lost the crucial Gorakhpur and Phulpur Lok Sabha bypolls in Uttar Pradesh to the Samajwadi Party and the Araria seat in Bihar to Lalu Yadav’s RJD, a shocking setback ahead of the 2019 general elections. Separately, the US challenged Indian export subsidies schemes at the World Trade Organisation, saying these programmes harm American workers by creating an uneven playing field. The US Trade Representative (USTR) argued that at least half a dozen Indian programmes provide financial benefits to Indian exporters, which allow them to sell their goods more cheaply to the detriment of American workers and manufacturers.

Investors took note that a day after Reserve Bank of India (RBI) banned banks from issuing letters of undertaking (LoU), Finance Ministry’s Principal Economic Advisor Sanjeev Sanyal said that no issue can be dealt in silos and policymakers have to be careful that blocking of one route does not spread to rest of the system. The country’s apex bank the RBI barred banks from issuing guarantees in the form of LoU as it clamped down on the import financing route used by fugitive jeweller Nirav Modi and his uncle Mehul Choksi for allegedly committing India’s biggest bank fraud. The street overlooked World Bank report which highlighted that India’s economy is expected to grow 7.3% in the next financial year and accelerate to 7.5% in 2019-20, bottoming out from the impact of demonetization and GST, even as it highlighted private investments and exports as the two lagging engines of growth. The World Bank said it expected Indian economy to clock a growth rate of 6.7% in the current financial year.

Traders were seen buying in Realty, Healthcare and Consumer Disc stocks, while selling was witnessed in Oil & Gas, Energy and Metal sector stocks. Realty sector stocks were buzzing on private report that the market size of the Indian real estate sector is expected to reach $180 billion by 2020 with the housing sector contribution doubling to 11.2% of GDP. Select banking stocks were under pressure as the overseas branches of Indian banks will have to rejig their business model after the RBI decided to ban LoUs as a trade finance instrument, since most of their assets abroad are linked through this instrument. In scrip specific development, MMTC was trading firm as its board will meet on March 19, 2018 to consider bonus issue.

On the global front, Asian markets were trading mostly in red. Bank of Japan Governor Haruhiko Kuroda said that the central bank’s powerful monetary easing has had a significant impact on financial institutions’ profits. Kuroda added that BoJ will closely watch how its policy affects bank profits, financial intermediation and the stability of Japan’s banking system. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 33,900 and 10,450 levels respectively. The market breadth on BSE was positive in the ratio of 1470:758, while 109 scrips remained unchanged.

The BSE Sensex is currently trading at 33832.53, down by 3.21 points or 0.01% after trading in a range of 33769.26 and 33866.28. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.70%, while Small cap index was up by 0.80%.

The top gaining sectoral indices on the BSE were Realty up by 0.97%, Healthcare up by 0.62%, Consumer Disc up by 0.59%, Consumer Durables up by 0.47% and Industrials up by 0.44%, while Oil & Gas down by 0.71%, Energy down by 0.55%, Metal down by 0.26%, Bankex down by 0.20% and PSU down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Wipro up by 1.41%, Hero MotoCorp up by 1.34%, Mahindra & Mahindra up by 1.21%, Dr. Reddy’s Lab up by 1.20% and Sun Pharma up by 0.68%.

On the flip side, Yes Bank down by 1.11%, ICICI Bank down by 1.00%, NTPC down by 0.74%, Bharti Airtel down by 0.73% and Reliance Industries down by 0.55% were the top losers.

Meanwhile, terming Indian economy as credible, the World Bank in its latest biannual publication has projected the country’s gross domestic product (GDP) growth at 7.3% for the next fiscal year 2018-19 (FY19) and added that growth will accelerate further to 7.5% in FY20. It said that growth will be supported by private consumption, investment, and exports. It also foresees that Indian economy will grow at the rate of 6.7% in the current fiscal year 2017-18 (FY18).

The report titled ‘India Development Update: India's Growth Story’ has observed that a growth of over 8% will require continued reform and a widening of their scope aimed at resolving issues related to credit and investment, and enhancing competitiveness of exports. It also said that the country’s GDP growth saw a temporary dip in the last two quarters of FY17 and the first quarter of FY18 due to demonetisation and disruptions surrounding the initial implementation of Goods and Services Tax (GST). It added that the Indian economy is expected to recover from the demonetisation and GST impact, and growth should revert slowly to a level consistent with its proximate factors -- that is, to about 7.5% a year.

The report further stated that India’s long-term growth has become more steady, stable, diversified and resilient. In the long-run, for higher growth to be sustainable and inclusive, India needs to use land and water, which are increasingly becoming scarce resources, make growth more inclusive and strengthen its public sector to meet challenges of a fast growing, globalizing and increasingly middle-class economy. However, it pointed out that financial markets’ liquidity may tighten, which may pose certain short-run risks for the economy. Besides, if investment, exports, credit do not gain sufficient momentum, it may not do much to accelerate GDP growth.

The CNX Nifty is currently trading at 10401.45, down by 9.45 points or 0.09% after trading in a range of 10387.10 and 10420.00. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 1.27%, Mahindra & Mahindra up by 1.22%, Wipro up by 1.17%, Dr. Reddy’s Lab up by 1.06% and Bharti Infratel up by 1.05%.

On the flip side, Indian Oil Corporation down by 2.54%, Yes Bank down by 1.27%, Hindalco down by 1.24%, ICICI Bank down by 0.95% and Bharti Airtel down by 0.83% were the top losers.

The Asian markets were trading mostly in red; Jakarta Composite decreased 33.43 points or 0.52% to 6,349.19, Shanghai Composite decreased 7.59 points or 0.23% to 3,283.79, FTSE Bursa Malaysia KLCI decreased 4.72 points or 0.25% to 1,852.34 and Taiwan Weighted decreased 3.44 points or 0.03% to 11,035.36.

On the other hand, Hang Seng increased 4.14 points or 0.01% to 31,439.15, KOSPI Index increased 5.48 points or 0.22% to 2,491.56 and Nikkei 225 increased 16.78 points or 0.08% to 21,794.07.