Benchmarks trade lower in early deals; Nifty breaches 10,400 mark

Indian equity benchmarks made a cautious start and are trading in red terrain in early deals as traders opted to book profit after four days of continuous rally, ahead of quarterly earnings this week, with IT major Infosys likely to declare its March quarter results on April 13. On the macro economic front, the government will unveil industrial output figures for February and retail inflation data for March on April 12. Traders shrugged off Asian Development Bank’s report that India is expected to bounce back to 7.3% in fiscal 2018 and firm to 7.6% in 2019 as the new tax regime improves productivity and as banking reform and corporate deleveraging take hold to reverse a downtrend in investment. Traders also failed to take any sense of relief with World Economic Forum’s (WEF) statement that India can play a pivotal role in shaping the global fourth Industrial revolution as over half of its population is under the age of 27. The WEF has already partnered with the Indian government to set up the Centre for the Fourth Industrial Revolution India in Mumbai.

On the global front, Asian markets are trading mostly in green at this point of time tracking strength overnight in the U.S. and Europe as Chinese President Xi Jinping’s comments eased concerns about a trade war and calmed the market. The U.S. stocks edged higher on Tuesday as traders reacted positively to comments from Chinese Xi Jinping regarding the trade dispute between China and the U.S.

Back home, traders were concerned with report highlighting that Fitch Ratings downgraded the viability rating of Punjab National Bank (PNB) to ‘BB-’from’BB’, saying that fraudulent transactions will affect the bank’s financials, including its earnings and core capitalization. In scrip specific developments, HFCL surged on bagging advance purchase order worth Rs 579 crore from BSNL and Indiabulls Real Estate edged higher with arm inking non-binding term sheet with OEL.

The BSE Sensex is currently trading at 33765.11, down by 115.14 points or 0.34% after trading in a range of 33756.50 and 33972.51. There were 9 stocks advancing against 20 stocks declining on the index, while 2 stocks remained unchanged.

The broader indices were trading in red; the BSE Mid cap index declined 0.40%, while Small cap index was down by 0.22%.

The top gaining sectoral indices on the BSE were Metal up by 1.15%, IT up by 0.65%, TECK up by 0.57%, Telecom up by 0.25% and Energy up by 0.16%, while Bankex down by 1.07%, PSU down by 0.60%, FMCG down by 0.46%, Auto down by 0.33% and Consumer Disc down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.33%, TCS up by 1.21%, Sun Pharma Industries up by 0.80%, Bharti Airtel up by 0.51% and Reliance Industries up by 0.45%. On the flip side, Adani Ports down by 2.24%, SBI down by 1.99%, ICICI Bank down by 1.89%, Axis Bank down by 1.39% and Yes Bank down by 1.16% were the top losers.

Meanwhile, with the help of rise in productivity post Goods and Services Tax (GST) and investment revival on the back of banking reform, the Asian Development Bank (ADB) in its latest report has said growth in the Indian economy is expected to rebound to 7.3% in the fiscal year 2018 and will accelerate further to 7.6% in 2019. It added that the country’s Gross Domestic Product (GDP) grew 6.6% in the fiscal year 2017 due to the lingering effects of demonetization in 2016, businesses adjusting to a new tax regime in 2017, and subdued agriculture.

In its Asian Development Outlook, 2018, ADB has stated that overall growth will get a boost on improved rural consumption, a modest uptick in private investment, and less drag from net exports. It also said that urban consumption growth will remain stable, and impetus from public investment modest. It added that growth will pick up further in 2019 as efforts to strengthen the banking system and continued corporate deleveraging are likely to bolster private investment. Also set to catalyse growth are benefits from the GST as it mitigates geographic fragmentation and adds revenue to the exchequer, as well as further progress on fiscal consolidation and reform to promote foreign direct investment (FDI).

The report pointed out that the prospects for policy stimulus remain limited and there is risk of tight interest rate regime. It also said that the deferment of fiscal consolidation, upside risks to inflation, and expected hikes in US interest rates in 2018 squeeze maneuvering room for policy rate cuts to stimulate growth. At the same time, the odds of a rate hike are low with the central bank indicating tolerance for slightly higher inflation and recognition of the need to nurture recovery. Consequently, it said that the status quo is likely to hold in FY2018, albeit with some risk of monetary tightening. Besides, it projected inflation to average 4.6% in 2018, rising to 5.0% in 2019 with further firming of global commodity prices and strengthening of domestic demand.

The CNX Nifty is currently trading at 10370.05, down by 32.20 points or 0.31% after trading in a range of 10364.60 and 10428.15. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 2.50%, ONGC up by 2.33%, HCL Tech. up by 1.87%, Hindalco up by 1.78% and TCS up by 1.10%. On the flip side, HPCL down by 3.03%, Adani Ports down by 2.53%, Indian Oil Corporation down by 2.20%, SBI down by 2.05% and ICICI Bank down by 1.80% were the top losers.

Asian markets are trading mostly in green; FTSE Bursa Malaysia KLCI gained 7.05 points or 0.38% to 1,868.03, Shanghai Composite surged 28.75 points or 0.9% to 3,219.07, Jakarta Composite increased 32.03 points or 0.51% to 6,357.84, Taiwan Weighted added 41.69 points or 0.38% to 10,968.87 and Hang Seng was up by 231.98 points or 0.75% to 30,960.72.

On the flip side, Nikkei 225 decreased 62.33 points or 0.29% to 21,731.99 and KOSPI Index was down by 0.04 points or 0% to 2,450.70.