Key gauges continue sluggish trend

Mirroring weak global cues, domestic equity indices continued their sluggish trend in morning session, as risk appetite soured on bets that Europe’s massive monetary stimulus was nearing an end, compounded by uncertainty over trade relations ahead of a key meeting of global leaders. Investors remained on the back foot after rupee fell to its one week low against the dollar in the morning trade. Some cautiousness also came with a report stating that Moody’s expects India to stick to the estimated fiscal deficit of 3.3% of GDP and even cut capital expenditure to offset any slippage from the budgeted target. However, any reduction in the excise duty on petroleum and diesel products in view of high crude oil prices, would exert negative pressure on India’s sovereign credit profile. Investors also continue to react on Reserve Bank of India's (RBI) first rate hike since 2014, while maintaining a neutral stance. Traders failed to take any sense of relief from report stating that the bilateral trade between India and Thailand is expected to touch $11 billion in 2018 from $10 billion in 2017. Thailand views India as the gateway to South Asia and beyond. As a result of the reduced tariff rates and new initiatives adopted by both the countries, bilateral trade has increased in recent years.

On the global front, Asian market were trading in red, on heightened caution ahead of a key meeting of global leaders and amid expectations that the Federal Reserve will raise US interest rates next week. Global risk appetite took a hit after US jobless claims pointed to a further tightening in labour market conditions, cementing expectations the Fed will raise benchmark US rates next week and twice again later in the year. Back home, in scrip specific development, Omax Autos touched the roof on getting nod for capacity expansion of existing capacity for manufacturing products and equipment supplied to railways.

The BSE Sensex is currently trading at 35367.41, down by 95.67 points or 0.27% after trading in a range of 35309.12 and 35415.19. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.18%, while Small cap index was up by 0.33%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.92%, IT up by 0.59%, TECK up by 0.54%, Consumer Durables up by 0.33% and Telecom was up by 0.24%, while Power down by 0.59%, Bankex down by 0.55%, Oil & Gas down by 0.55%, Utilities down by 0.53% and Energy was down by 0.53% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.33%, Dr. Reddy’s Lab up by 2.49%, Tata Motors - DVR up by 1.67%, Tata Motors up by 1.62% and TCS was up by 0.97%. On the flip side, Power Grid down by 1.87%, ICICI Bank down by 1.17%, Mahindra & Mahindra down by 0.89%, Hero MotoCorp down by 0.87% and Hindustan Unilever was down by 0.86% were the top losers.

Meanwhile, in order to support investment and inclusive growth agenda, the International Monetary Fund (IMF) has said it is import for India to address ongoing banking crisis.  It also said that the authorities have made progress in addressing the stock of non-performing assets (NPAs) and were taking further measures to deal with the flow problem. These steps include the recognition of these NPAs, the resolution framework under the Insolvency and Bankruptcy Code.

IMF further stated that to identify and closely monitor asset quality issues, it was a positive step as a more proactive approach was being taken, and added that these needs to be complemented by further governance reforms in this area, especially regarding the public-sector banks to materially improve risk management and operations.

Besides, in the view of rising inflation and additional upside risks to the forecasts on account of higher oil prices, exchange rate depreciation and other domestic factors, the IMF welcomed the decision of the Reserve Bank of India (RBI) to increase rate. The RBI increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points (bps) to 6.25%, the first increase since January 2014.

The CNX Nifty is currently trading at 10734.70, down by 33.65 points or 0.31% after trading in a range of 10717.70 and 10750.45. There were 19 stocks advancing against 31 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Sun Pharma up by 3.35%, Dr. Reddy’s Lab up by 2.60%, Lupin up by 1.97%, Cipla up by 1.90% and Tata Motors was up by 1.64%. On the flip side, Power Grid down by 2.05%, HPCL down by 1.98%, BPCL down by 1.73%, Hindalco down by 1.43% and ICICI Bank was down by 1.19% were the top losers.

Asian market were trading in red, Hang Seng slipped 386.23 points or 1.23% to 31,126.40, Taiwan Weighted declined 99.19 points or 0.88% to 11,152.56, Nikkei 225 fell 94.6 points or 0.41% to 22,728.66, Jakarta Composite losses 51.07 points or 0.84% to 6,055.63, Shanghai Composite dropped 39.02 points or 1.25% to 3,070.48, KOSPI Index declined 13.68 points or 0.55% to 2,456.90 and FTSE Bursa Malaysia KLCI was down by 10.37 points or 0.58% to 1,775.44.