Weak global cues drag benchmarks lower in early deals

Indian equity benchmarks made a cautious start and are trading lower in early deals on Friday amid weak global cues. Sentiments remained dampened with IMF chief Christine Lagarde’s statement that she does not expect the pace of economic reforms in India to continue in an election year. However, losses remained capped as traders getting some solace with Chief Economic Adviser Arvind Subramanian’s statement that the India-US ties have been extremely well on the strategic and defence fronts but the relationship cannot realise its full potential without stronger economic bond. Traders are also getting some comfort with report that PE investments witnessed a robust 46 per cent jump in deal values at $1.3 billion in March, taking the total tally for the first quarter of 2018 to $4 billion, up 76 per cent over the same period a year ago.

On the global front, Asian markets were trading in red after two days of broad gains, with technology stocks leading the way following a downbeat outlook from Taiwan Semiconductor Manufacturing Company. The US markets ended lower on Thursday despite the Labor Department releasing a report showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended April 14th.

Back home, India and Mauritius concluded the second round of negotiations for the proposed free trade agreement (FTA), aimed at boosting bilateral trade and investments. There will be some important earnings announcements too, to keep the markets buzzing. In scrip specific developments, Cyient surged on reporting 51% rise in Q4 consolidated net profit, while IMFA tumbled on receiving demand notices worth Rs 24.13 crore for alleged excess mining.

The BSE Sensex is currently trading at 34346.42, down by 80.87 points or 0.23% after trading in a range of 34336.06 and 34453.71. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.46%, while Small cap index was down by 0.20%.

The few gaining sectoral indices on the BSE were IT up by 2.91%, TECK up by 2.36% and Consumer Durables was up by 0.24%, while Metal down by 1.54%, Basic Materials down by 0.93%, Realty down by 0.88%, Bankex down by 0.77% and PSU was down by 0.64% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 3.99%, Infosys up by 2.41%, Wipro up by 2.19%, Tata Motors up by 1.54% and Tata Motors - DVR up by 1.20%. On the flip side, Tata Steel down by 1.78%, Asian Paints down by 1.42%, SBI down by 1.34%, Bajaj Auto down by 1.23% and Indusind Bank down by 1.22% were the top losers.

Meanwhile, in a bid to support Micro- Small and Medium Enterprises (MSME) over the cash crunch issue, the Government of India (GoI) has approached the Reserve Bank of India (RBI) to ease norms for non-performing assets (NPAs) or bad loans in case of small and mid-sized businesses. The MSME ministry is looking for an extension of the NPA classification period from the current 90-day window to 180 days and RBI is making efforts to get it further extended.

Generally, an accounts turns NPA if it is not serviced for 90 days and in case of small businesses and SMEs, payments usually delayed. Once they miss the 90-day period and fall in the NPA category, their credit line is cut. In the absence of vibrant factoring or trade receivable market, small business and SME face the issue of timely credit availability.

As of now, banks are sitting on unrecognised stressed loans worth approximately Rs 7.7 lakh crore in corporate and SME sectors and expect around 35 per cent of them to slip into the NPA category in the next few months.

The CNX Nifty is currently trading at 10544.60, down by 20.70 points or 0.20% after trading in a range of 10539.65 and 10564.00. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were TCS up by 4.10%, HCL Tech up by 3.24%, Tech Mahindra up by 3.11%, Infosys up by 2.51% and Wipro up by 2.00%. On the flip side, Hindalco down by 2.66%, Tata Steel down by 2.00%, Vedanta down by 1.92%, Bajaj Finance down by 1.86% and Asian Paints down by 1.52% were the top losers.

Asian markets are trading lower; Taiwan Weighted declined 181.37 points or 1.65% to 10,789.85, Hang Seng decreased 128.9 points or 0.42% to 30,579.54, Nikkei 225 slipped 38.33 points or 0.17% to 22,152.85, Shanghai Composite dropped 37.37 points or 1.2% to 3,080.01, Jakarta Composite fell 35.13 points or 0.55% to 6,320.77, KOSPI Index shed 6.78 points or 0.27% to 2,479.32 and FTSE Bursa Malaysia KLCI was down by 6.57 points or 0.35% to 1,888.61.