Benchmarks continue weak trade in morning session

Indian equity benchmarks continued their weak firm trade in morning session on account of selling in frontline blue chip counters. The rupee opened lower against the US dollar as rising crude oil prices raised concerns of widening current account deficit and renewed inflation fears amid worsening geopolitical environment. Investors will be eyeing inflation data based on Wholesale Price Index (WPI) for March scheduled to be released today. The sentiments were under pressure as US on early Saturday launched air strikes on Syria in a combined operation with France and Britain in response to a suspected poison gas attack that killed dozens of people last week. Russian President Vladimir Putin told Iranian Presiden Hassan Rouhani that further attacks by Western allies in Syria would inevitably lead to chaos in international relations. Separately, India’s exports crossed the $300 billion mark after a gap of two years in FY18 even as shipments declined in March and higher imports pushed the trade deficit for the full year to a five-year high. India’s trade deficit widened to $156.8 billion in 2017-18 compared with $108.5 billion in FY17 amid rising global trade tensions. Imports were up 7.2% to $42.8 billion in March, yielding a traded deficit of $13.7 billion against $10.7 billion in March last year. Investments through Participatory notes (P-notes) plunged to nearly nine-year low of Rs 1.06 lakh crore in the capital market at March-end amid stringent norms put in place by the regulator SEBI to check misuse of these instruments. According to the SEBI data, total value of P-note investments in Indian markets -- equity, debt, and derivatives -- slumped to a low of Rs 1,06,403 crore at March-end from Rs 1,06,760 crore at the end of the preceding month. Prior to that, the figure was Rs 1.19 lakh crore.

Meanwhile, select banking stocks were under pressure as the Non-performing assets (NPAs) or bad loans in the banking sector are set to shoot up by at least Rs 8,000 crore as advances to the scam-hit Gitanjali Gems group have turned bad during the quarter ended March 31. Banks will have to make provisioning of Rs 8,000 crore for Gitanjali alone. A consortium of 21 banks led by Allahabad Bank had first extended working capital loan to it in 2010-11. In 2014, ICICI Bank became the lead banker as it had highest exposure of about Rs 900 crore. Separately, the Central Bureau of Investigation (CBI) has filed a case against a former chairman of state-run UCO Bank and several business executives alleging criminal conspiracy that caused a loss of Rs 621 crore ($95.17 million). Majority of sugar stocks were trading in red as the government is unlikely to give any export subsidy to sugar mills even as it has asked mills to give priority to clear sugar arrears to farmers, which has mounted to more than Rs 18,000 crore. A food ministry official said that at present there is no proposal by the government to give any export subsidy to sugar mills.

The downsides was however capped on Asian Development Bank (ADB) report which said that India will be able to attain a growth of 8% in a significant manner if the country is able to reframe its investment parameter and make its exports competitive. Efforts will also have to be made to rationalize agriculture marketing as this is the area where there is scope for more reforms. Separately, with more than half of India’s population under the age of 27, the World Economic Forum (WEF) President Borge Brende said that the country can play a pivotal role in shaping the global fourth industrial revolution. He also said that India can lead the fourth industrial revolution and simultaneously enhance the quality, equity and sustainability of its own growth and development outcomes.

Traders were seen buying in Healthcare, Realty and FMCG stocks, while selling was witnessed in IT, TECK and Energy sector stocks. In scrip specific development, Alok Industries was locked at lower circuit limit after lenders to the company rejected a revised offer by Reliance Industries-JM Financial Asset Reconstruction Company to acquire the bankrupt company. RIL in conjunction with JM Financial Asset Reconstruction Company submitted a resolution plan for Alok Industries. The plan did not meet with the approval of the Committee of Creditors of Alok Industries as required under the Insolvency and Bankruptcy Code.

On the global front, Asian markets were trading mostly in red amid Syria fallout. Investors were keeping a wary eye on Japanese politics after a survey showed support for Japanese Prime Minister Shinzo Abe had fallen to 26.7%, the lowest since he took office in late 2012. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 34,200 and 10,500 levels, respectively. The market breadth on BSE was negative in the ratio of 950:1264, while 164 scrips remained unchanged.

The BSE Sensex is currently trading at 34136.09, down by 56.56 points or 0.17% after trading in a range of 33899.34 and 34169.29. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.02%, while Small cap index was up by 0.13%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.92%, Realty up by 0.57%, FMCG up by 0.48%, Capital Goods up by 0.19% and Basic Materials up by 0.16%, while IT down by 0.85%, TECK down by 0.78%, Energy down by 0.76%, Oil & Gas down by 0.71% and Telecom down by 0.59% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.04%, ITC up by 0.86%, NTPC up by 0.79%, Adani Ports & Special Economic Zone up by 0.76% and Dr. Reddy’s Lab up by 0.72%.

On the flip side, Infosys down by 2.91%, Tata Motors - DVR down by 2.66%, Tata Motors down by 2.64%, Axis Bank down by 1.29% and Reliance Industries down by 0.94% were the top losers.

Meanwhile, Asian Development Bank (ADB) has said India will able to attain a growth of 8 percent in a significant manner if the country is able to reframe its investment parameter and make its exports competitive. Efforts will also have to be made to rationalize agriculture marketing as this is the area where there is scope for more reforms. Earlier, ADB in its Asian Development Outlook, 2018 expects India’s growth to pick up to 7.3 per cent in current fiscal and accelerate further to 7.6 per cent in the next financial year.

Referring to exports, ADB said India is still a marginal player in global trade and there is a lot of potential to increase exports. While mentioning investments, ADB said credit to infrastructure and industry is rising, which is a constructive signal. But clearly a lot more needs to be done if the investment has to pick up. In addition, ADB elaborated on the reform scope in farm sector that the government could revamp the Agricultural Produce Market Committee (APMC) Act and restructure the farm supply chain for free movement of goods.

ADB said India can even achieve double digit growth but only if it can do that over a longer term period given the state of infrastructure and regulatory policies. Moreover, a lot more reforms would probably be needed for that as well. Moreover, India can reap benefits by improving competitiveness, as Chinese exports are becoming expensive because of rising wages. For that, India needs to improve its Ease of Doing Business and state of infra to benefit from trade and be better integrated into the value chain.

The CNX Nifty is currently trading at 10473.00, down by 7.60 points or 0.07% after trading in a range of 10396.35 and 10477.65. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Cipla up by 4.01%, Grasim Industries up by 2.66%, Lupin up by 1.85%, Indiabulls Housing Finance up by 1.56% and TCS up by 1.32%.

On the flip side, Infosys down by 3.09%, Tata Motors down by 2.86%, Axis Bank down by 1.93%, GAIL India down by 1.13% and Eicher Motors down by 1.02% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 484.49 points or 1.57% to 30,323.89, Shanghai Composite decreased 42.37 points or 1.34% to 3,116.69, Taiwan Weighted decreased 14.56 points or 0.13% to 10,950.83 and KOSPI Index decreased 0.42 points or 0.02% to 2,454.65.

On the other hand, FTSE Bursa Malaysia KLCI increased 3.53 points or 0.19% to 1,872.00, Jakarta Composite increased 28.39 points or 0.45% to 6,298.72 and Nikkei 225 increased 50.78 points or 0.23% to 21,829.52.