Benchmarks trade slightly in red in morning trade

Indian equity benchmarks made a cautious start and are trading slightly in red in early deals on Friday after U.S. President Donald Trump ordered his administration to consider tariffs on a $100 billion worth of Chinese imports, dashing hopes for a cooling of trade tensions. However, losses remained capped as some solace came after the finance ministry welcomed the Monetary Policy Committee’s (MPC) projection of higher GDP growth and lower inflation in the current fiscal. The MPC’s growth projection of 7.4 percent is in line with the Economic Survey. Sentiments also got some support with private report that Indian services sector climbed back into expansion zone in March, helped by the flow of new work, encouraging companies to hire at the fastest pace in seven years.

On the global front, Asian markets are trading mostly in red at this point of time as the overnight rally on Wall Street failed to translate after President Donald Trump indicated that more tariffs against China could be in the works. The US markets closed higher for the third straight day on easing concerns about a potential trade war between the U.S. and China.

Back home, stocks related to fast moving consumer goods (FMCG) space remained buzzing on report that FMCG firms are expected to post a net revenue growth of 11.8 percent in the March quarter, highest in the past 18 quarters, on acceleration in volume growth, GST-led savings and higher leverage benefits. In scrip specific developments, IOC rose on concluding acquisition of 17% participating interest in Mukhaizna oil field and PSP Projects strengthened on bagging work orders worth Rs 87.33 crore.

The BSE Sensex is currently trading at 33535.87, down by 60.93 points or 0.18% after trading in a range of 33503.25 and 33614.49. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.12%, while Small cap index was down by 0.01%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.62%, Realty up by 0.55%, Healthcare up by 0.36%, Energy up by 0.29% and FMCG was up by 0.23%, while Metal down by 0.78%, Consumer Durables down by 0.62%, Capital Goods down by 0.51%, Industrials down by 0.50% and Auto down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 1.40%, Dr. Reddys Lab up by 0.71%, ITC up by 0.67%, ONGC up by 0.51% and HDFC up by 0.50%. On the flip side, Tata Motors - DVR down by 2.06%, Tata Motors down by 1.72%, Larsen & Toubro down by 1.09%, Axis Bank down by 1.08% and Infosys down by 1.07% were the top losers.

Meanwhile, the Reserve Bank of India (RBI), in its first bi-monthly monetary policy review of 2018-19 has maintained status quo on repo rate for the fourth time in a row. The RBI, has kept repo rate under the liquidity adjustment facility (LAF) unchanged at 6% and has retained its ‘neutral’ stance. Consequently, the reverse repo rate under the LAF remained at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25%. The monetary policy committee (MPC) has reiterated its commitment to achieving the medium-term target for headline inflation of 4% on a durable basis.

The RBI’s six-member MPC, headed by Governor Urjit Patel, has revised its CPI inflation forecast to 4.7-5.1% in H12018-19 and 4.4% in H2, including the HRA impact for central government employees, with risks tilted to the upside. Earlier, it had forecasted inflation in the range of 5.1-5.6% in H12018-19 and 4.5-4.6% in H2. Listing down the factors that influence the inflation outlook, it said with the sharp moderation in food prices in February-March, the inflation trajectory in H1 FY19 is expected to be lower than the projection in February. It also said that Indian domestic demand is expected to strengthen during the course of the year and the statistical impact of an increase in HRA for central government employees under the 7th CPC will continue till mid-2018, and gradually dissipate thereafter.

However, the MPC also listed several uncertainties surrounding the baseline inflation path. It said that revised formula for MSP as announced in the Union Budget 2018-19 for kharif crops may have an impact on inflation, the staggered impact of HRA revisions by various state governments may push headline inflation up. It also said that in case there is any further fiscal slippage from the Union Budget estimates for FY19 or the medium-term path, it could adversely impact the outlook on inflation.

On the growth front, the Central Bank has projected that India’s Gross Domestic Product (GDP) growth to strengthen from 6.6% in FY18 to 7.4% in FY19. It also said that for the first half of the current fiscal year GDP will be in the range of 7.3-7.4%, while in second half it will be in the range of 7.3-7.6%, with risks evenly balanced. It further said that factors that are expected to accelerate the pace of economic activity in FY19 includes, the clearer signs of revival in investment activity as reflected in the sustained expansion in capital goods production and still rising imports, albeit at a slower pace than in January. Also, global demand has been improving, which should encourage exports and boost fresh investment.

The CNX Nifty is currently trading at 10304.45, down by 20.70 points or 0.20% after trading in a range of 10291.05 and 10325.80. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were HPCL up by 2.20%, BPCL up by 1.95%, Adani Ports up by 1.45%, Cipla up by 1.42% and Lupin up by 1.37%. On the flip side, SBI down by 1.52%, Tata Motors down by 1.50%, Vedanta down by 1.43%, Infosys down by 1.31% and Larsen & Toubro down by 1.14% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 shed 14.61 points or 0.07% to 21,630.81, KOSPI Index decreased 13.15 points or 0.54% to 2,424.37, Jakarta Composite slipped 4.75 points or 0.08% to 6,178.48 and FTSE Bursa Malaysia KLCI was down by 2.74 points or 0.15% to 1,833.39.

On the flip side, Hang Seng was up by 371.27 points or 1.26% to 29,889.96.