Markets make pessimistic start on feeble global cues

Indian equity benchmarks made pessimistic start and are trading in red in early deals on Friday as global markets turned defensive on concerns over the U.S. investigation into the Trump Organization and renewed worries that U.S. tariffs could hurt the global economy. Sentiments also remained dampened on report that India’s trade deficit for February 2018 was estimated at $11,979.21 million, 25.8 per cent higher than the $9,521.73-million deficit reported during February 2017. Exports from the country rose 4.48 per cent in dollar terms during February this year compared to the same month of the last fiscal. But, in rupee terms, export growth was flat with a mere 0.27 per cent rise, reflecting a dip in value of the Indian currency. Imports rose during the month under consideration and were 10.41 per cent higher (in dollar terms).

Global cues too remained sluggish with most of the Asian markets are trading in red terrain at this point of time amid a backdrop of global trade-related developments and news out of Washington. The US markets ended mostly in red on Thursday, as traders digested a slew of U.S. economic data, including a report from the Labor Department showing initial jobless claims edged lower in the week ended March 10th.

Traders failed to get any sense of relief with IMF’s statement that India should see its growth picking up this year after two transitory shocks - the demonetisation and the GST - while China’s growth is likely to fall gradually. In its G-20 Surveillance Note Global Prospects and Policy Challenges ahead of the G-20 Finance Ministers meeting in Argentina next week, the International Monetary Fund said that globally growth is expected to revert to a weaker trend.

The BSE Sensex is currently trading at 33494.31, down by 191.23 points or 0.57% after trading in a range of 33471.08 and 33691.32. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.10%, while Small cap index was up by 0.23%.

The few gaining sectoral indices on the BSE were Realty up by 0.30%, Capital Goods up by 0.14%, Telecom up by 0.10% and Consumer Discretionary Goods & Services up by 0.07%, while Energy down by 1.63%, Oil & Gas down by 1.41%, Metal down by 1.28%, PSU down by 0.85% and Utilities was down by 0.45% were the losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 1.82%, Yes Bank up by 0.86%, Dr. Reddys Lab up by 0.41%, Wipro up by 0.22% and Hindustan Unilever up by 0.20%. On the flip side, Coal India down by 5.75%, Tata Motors down by 1.87%, ONGC down by 1.52%, Tata Motors - DVR down by 1.50% and Asian Paints down by 1.32% were the top losers.

Meanwhile, after two transitory shocks that is the demonetisation and implementation of Goods and Services Tax (GST), the International Monetary Fund (IMF) in its latest G-20 Surveillance Note has said that India should see its growth picking up in the current year. However, it added that China’s growth is likely to fall gradually due to the anticipated withdrawal of fiscal stimulus and moderating credit impulse.

On the global front, the report titled ‘Global Prospects and Policy Challenges’ stated that globally growth is expected to return to a weaker trend. In the US, a higher growth is projected amid buoyant external demand and the expected impact of tax changes and higher federal fiscal spending. It added that emerging economies present a more heterogenous picture. It further said that in emerging Europe, activity will remain buoyant amid strong export demand from the euro area, and the recovery in Brazil and Russia is expected to firm.

According to the IMF, the recent recovery in investment can add to potential output growth, after downward revisions over the past years. However, medium-term prospects are still held down by a host of factors. It also warned that population aging, insufficient reforms, and the slowed accumulation of human capital will likely continue to weigh on growth prospects. It also expressed concern that in the absence of structural reforms that facilitate adjustment and the use of the tax-benefit system to mitigate the divide, could threaten making growth less inclusive and it could also fuel political discontent that deters reforms and thus undermines potential growth going forward.

The CNX Nifty is currently trading at 10299.50, down by 60.65 points or 0.59% after trading in a range of 10295.40 and 10346.30. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 1.76%, Aurobindo Pharma up by 1.76%, UPL up by 1.53%, Zee Entertainment up by 1.20% and Yes Bank up by 1.19%. On the flip side, Coal India down by 5.74%, Indian Oil Corporation down by 2.37%, BPCL down by 2.02%, Tata Motors down by 1.97% and HPCL down by 1.64% were the top losers.

All the Asian markets are trading in red; Nikkei 225 declined 157 points or 0.72% to 21,646.95, Hang Seng decreased 98.61 points or 0.31% to 31,442.49, Taiwan Weighted shed 64.78 points or 0.59% to 10,953.67, Jakarta Composite fell 39.06 points or 0.62% to 6,282.84, KOSPI Index dropped 7.73 points or 0.31% to 2,484.65, Shanghai Composite slipped 3.85 points or 0.12% to 3,287.26 and FTSE Bursa Malaysia KLCI was down by 3.48 points or 0.19% to 1,841.79.