Weak trade persist on Dalal Steet

The local equity benchmarks continued their weak in late afternoon session, despite firm opening in European markets. Besides, Energy index was top loser among all the sectoral indices with losses of over a percent. Investors remained concerned as Industry bodies said that RBI’s decision to ban Letters of Undertaking (LOUs) for trade credit for imports will have a disruptive impact, at least in the immediate term, as small businesses would require higher working capital. Sentiments were downbeat with a private report stating that the slowdown seen of late in India's export growth rate is likely to continue in February as well, thanks to a slow disbursement of Goods and Services Tax (GST) refunds, low growth in labour-intensive sectors and a volatile currency. Traders took note of a report that the proceedings of the Lok Sabha were paralysed for the ninth consecutive day today as several parties, including NDA constituent TDP, continued their noisy protests over various issues, including the PNB scam and special status for Andhra Pradesh. Further, the major industry losers like Tata Steel, Reliance Industries and Yes Bank, were also contributing to the losses. Traders failed to take sense of relief with Fitch Ratings in its latest ‘Global Economic Outlook’ forecasting that the Indian economy is likely to grow at the rate of 7.3% in the next fiscal (FY19) and further to 7.5% in FY20. 

On the global front, European markets were trading in green, as investors monitored new earnings and economic data, amid continued concerns over global trade. However, Asian markets were trading in red. Back home in scrip specific development, H.G. Infra Engineering jumped higher on emerging as the lowest bidder (L1) by the Ministry of Road Transportation & Highway, Government of India for new EPC project.

The BSE Sensex is currently trading at 33774.56, down by 61.18 points or 0.18% after trading in a range of 33677.07 and 33866.28. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.72%, while Small cap index was up by 0.89%.

The top gaining sectoral indices on the BSE were Realty up by 0.54%, Consumer Disc up by 0.46%, Industrials up by 0.42%, Power up by 0.25% and Consumer Durables up by 0.24%, while Energy down by 1.01%, Oil & Gas down by 0.92%, Metal down by 0.49%, FMCG down by 0.23% and Basic Materials down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.06%, HDFC Bank up by 1.03%, Kotak Mahindra Bank up by 0.79%, Coal India up by 0.72% and Indusind Bank up by 0.61%. On the flip side, Tata Steel down by 1.50%, Reliance Industries down by 1.46%, Yes Bank down by 1.24%, ICICI Bank down by 1.16% and Tata Motors - DVR down by 1.01% were the top losers.

Meanwhile, highlighting waning influence of one-off policy-related factor, the global credit rating agency, Fitch Ratings in its latest ‘Global Economic Outlook’ has forecasted that the Indian economy is likely to grow at the rate of 7.3% in the next fiscal (FY19) and further to 7.5% in FY20.  However, for the current fiscal year, the rating agency predicted lower growth rate of 6.5% as compared to Central Statistics Office’s (CSO) estimation of 6.6%.

Fitch noted that the currency in circulation is back to pre-demonetisation level in mid-2017 and is now increasing steadily, similar to the previous trend. Besides, it also highlighted that Goods and Services Tax (GST) led disruptions have slowly diminished. It further said that 2018-19 budget envisages a slower pace of fiscal consolidation and therefore should support the near-term growth outlook and added that the measures included in the budget such as a minimum price support and free health insurance will benefit low-income earners and will also support rural demand. It further listed various initiative reforms taken by the government for the sectors like infrastructure and banking and noted that policies come on top of substantial road construction plans and a bank recapitalisation plan would also support the country’s growth in the medium term.

On inflation front, the rating agency said that headline inflation picked up, due to accelerating food prices and it expects the Reserve Bank of India to start raising interest rates next year as growth gains further traction. Besides, it also expects inflationary pressures to remain quite high. However, it noted that fuel price increases have been contained by the government's decision to roll back excise duties to keep pump prices stable in the face of rising oil prices.

The CNX Nifty is currently trading at 10385.75, down by 25.15 points or 0.24% after trading in a range of 10357.50 and 10420.00. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 2.11%, Bajaj Finance up by 1.46%, Indiabulls Housing Finance up by 1.07%, HDFC Bank up by 1.06% and Bharti Infratel up by 0.91%. On the flip side, Indian Oil Corporation down by 2.90%, Reliance Industries down by 1.50%, Tata Steel down by 1.35%, Yes Bank down by 1.24% and ICICI Bank down by 1.09% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite decreased 58.4 points or 0.91% to 6,324.23, Taiwan Weighted decreased 20.35 points or 0.18% to 11,018.45, FTSE Bursa Malaysia KLCI decreased 5.13 points or 0.28% to 1,851.93 and Shanghai Composite decreased 0.27 points or 0.01% to 3,291.11. On the flip side, KOSPI Index increased 6.3 points or 0.25% to 2,492.38, Nikkei 225 increased 26.66 points or 0.12% to 21,803.95 and Hang Seng increased 106.09 points or 0.34% to 31,541.10.

All European markets were trading in green; UK’s FTSE 100 increased 8.61 points or 0.12% to 7,141.30, France’s CAC increased 15.02 points or 0.29% to 5,248.38 and Germany’s DAX increased 53.3 points or 0.44% to 12,291.04.