Weak trade prevails; Nifty below 10,000 mark

Indian equity benchmarks continued their weak trade in morning session on account of selling in frontline blue chip counters as the treat of a trade war with China sparked a widespread selloff. The rupee opened lower against the US dollar. According to the provisional stock exchange data, Foreign Investors put in Rs 161.11 crore in equity markets on the net basis on Thursday. The sentiments were also under pressure after a foreign brokerage report raised concern that India has emerged as one of the Asian economies most vulnerable in an environment of rising interest rates in the US. Higher interest rates stateside could trigger capital outflows from emerging economies as investors search for better yields in the US. Separately, credit ratings agency, ICRA in its latest report highlighted that India’s current account deficit (CAD) is likely to widen to $10-12 billion in the fourth quarter of the fiscal year 2017-18 (FY18), as against $3.4 billion in the same period of the previous fiscal year. The report stated that CAD may increase on the back of higher merchandise trade deficit and added that the services trade surplus is expected to improve.

Investors took note of a private report which said that handling the emerging frauds in the banking sector coupled with likely ripple effects, muted GST collections and the protectionist policy imposed by the US are some of the factors that are likely to keep risk to growth elevated. As per its economic forecast for March 2018, the report added that the government faces a challenging scenario of managing the growth momentum. The street shrugged off the report that monsoon rains in India are likely to be unaffected by the El Nino weather pattern, which is likely to set in only after the four-month rainy season ends in September. Monsoon season delivers about 70% of India’s annual rainfall and is key to the success of the farm sector, which accounts for about 15% of India’s $2 trillion economy but sustains nearly two thirds of the country’s 1.3 billion people.

Traders were seen buying in IT stocks, while selling was witnessed in Metal, Realty and Basic Materials sector stocks. In scrip specific development, realty stocks were under pressure on private report that Indian real estate has seen fewer launches, subdued sales and muted property prices in the year 2017. Launches of residential apartments across top seven property markets witnessed an on-year decline of nearly 50%, while sales also slipped 15%. The top 7 cities recorded new unit launches of around 1.26 lakh in 2017 as against 2.50 lakh in 2016. Defence equipment maker Bharat Dynamics made an unimpressive market debut as the scrip got listed at discount to the issue price of Rs 428. The Rs 960 crore IPO, which concluded last week, was subscribed 1.3 times. The price band was fixed at Rs 413-428 per share.

On the global front, Asian markets were trading in red. Japan’s key inflation gauge ticked up in February, putting the Bank of Japan halfway to its goal of 2 percent. Yet a strengthening yen and the threat of a global trade war underscore the central bank’s vulnerability to global markets and events. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 32,600 and 10,000 levels respectively. The market breadth on BSE was negative in the ratio of 302:1993, while 107 scrips remained unchanged.

The BSE Sensex is currently trading at 32590.94, down by 415.33 points or 1.26% after trading in a range of 32534.83 and 32690.15. There were 3 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.79%, while Small cap index was down by 1.98%.

The only gaining sectoral index on the BSE was IT up by 0.03%, while Metal down by 3.07%, Realty down by 2.80%, Basic Materials down by 2.60%, Bankex down by 2.05% and Industrials down by 1.88% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 0.81%, Mahindra & Mahindra up by 0.47% and Coal India up by 0.01%.

On the flip side, Yes Bank down by 3.62%, Tata Steel down by 3.45%, Bajaj Auto down by 3.05%, Axis Bank down by 2.95% and SBI down by 2.65% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has said that the government's demonetisation drive succeeded in finding black money in Indian market and controlling corruption. He also said that at the time of historic note ban on November 8, 2016, high-denomination currency notes of Rs 1000 and Rs 500 amounting to Rs 15.44 lakh crore were in circulation. Besides, he said that at the rate, Specified Bank Notes (SBNs) were growing in previous years, SBNs would have become of the order of about Rs 18 lakh crore in December, 2017. He added that the circulation of high value notes came down to 13.34 lakh crore last December, therefore, circulation of high value notes have been brought down effectively.

Jaitley has stated that as high denomination notes have been used for storing black money and in corruption, it may be concluded that note ban did control corruption and the generation of black money. Besides, he pointed out that demonetisation serving other objectives of eliminating fake currency, stopping terror financing, promoting formalisation of economy, promoting digital payments, also succeeded in unearthing black money and preventing corruption. He also said that after demonetization move, the Department of Revenue had launched ‘Operation Clean Money’ on January 31, 2017 and in its first phase, around 18 lakh persons were identified in whose case, cash transactions did not appear in line with the tax payer's profile.

The minister further said that online verification of such cash transactions was enabled and the information in respect of identified cases was made available in the e-filing window of the PAN holder. He noted that nearly 11 lakh persons submitted online response. He said that high risk cases have been made available to the field formation for effective monitoring and follow up. He also informed the House that data analytics was being used to match information in IT returns with cash deposit data and identify high risk cases/ groups for necessary verification/investigation.

The CNX Nifty is currently trading at 9994.20, down by 120.55 points or 1.19% after trading in a range of 9961.30 and 10012.85. There were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 1.23%, Infosys up by 0.90%, Bharti Infratel up by 0.84%, Tech Mahindra up by 0.80% and Mahindra & Mahindra up by 0.47%.

On the flip side, Hindalco down by 3.57%, Vedanta down by 3.55%, Yes Bank down by 3.45%, Tata Steel down by 3.19% and Axis Bank down by 2.91% were the top losers.

The Asian markets were trading in red; Hang Seng decreased 931.47 points or 3% to 30,139.58, Nikkei 225 decreased 931.17 points or 4.31% to 20,660.82, Taiwan Weighted decreased 196.52 points or 1.79% to 10,809.32, Shanghai Composite decreased 127.88 points or 3.92% to 3,135.60, Jakarta Composite decreased 107.88 points or 1.73% to 6,146.19, KOSPI Index decreased 67.9 points or 2.72% to 2,428.12 and FTSE Bursa Malaysia KLCI decreased 12.49 points or 0.67% to 1,864.38.