Benchmarks pare gains to turn red in early deals

Indian equity benchmarks pared their opening gains and entered into red terrain in early deals on Thursday, as investors are likely to watch out for developments in the Parliament on Thursday after the opposition parties tabled a no-confidence motion against Prime Minister Narendra Modi’s government. Traders took note of a recent ASSOCHAM-Ashvin Parekh Advisory Services LLP (APAS) joint study stating that a developed corporate bond market is the need of the hour for India as an 8% economic growth cannot be achieved without a robust corporate capex cycle, more so as sole reliance on bank loans is not warranted, particularly when bank lending has been squeezed. However, losses remained capped with report that the government has initiated as many as 214 anti-dumping investigations up to December last year against China, with which India has a huge trade deficit. The trade deficit (difference between imports and exports) with China has increased to $63.12 billion in 2017-18 from $51 billion in the previous fiscal.

On the global front, Asian markets are exhibiting mixed trend, taking cues from Wall Street’s overnight advance as investors there parsed through stronger-than-expected corporate earnings. The US markets ended mostly higher on Wednesday, as the anecdotal account of business conditions in the Fed’s 12 districts showed that 11 regions of the country were growing at a modest pace or even faster.

Back home, PSU banking stocks edged mostly higher with report that after approving capital support for five public sector banks (PSBs), the finance ministry is assessing the needs of 2-3 more banks and fund infusion in them would be done by the end of the second quarter of the current fiscal. Stocks related to airline space edged lower with ICRA’s latest report that the domestic airline industry is expected to post losses to the tune of Rs 3,600 crore in the current fiscal on rise in crude oil prices and falling rupee.

The BSE Sensex is currently trading at 36340.57, down by 32.87 points or 0.09% after trading in a range of 36340.39 and 36515.58. 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 1.12%, while Small cap index was down by 1.05%.

The only gaining sectoral indiex on the BSE was Consumer Durablesup by 0.26%, while Basic Materials down by 1.24%, Metal down by 1.22%, Telecom down by 0.92%, Healthcare down by 0.90% and PSU was down by 0.79% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.81%, Bharti Airtel up by 1.54%, Hindustan Unilever up by 1.06%, Mahindra & Mahindra up by 0.96% and Adani Ports was up by 0.69%. On the flip side, Tata Steel down by 1.76%, SBI down by 0.87%, Axis Bank down by 0.65%, ITC down by 0.60% and Sun Pharma was down by 0.59% were the top losers.

Meanwhile, amid import duty hike by the US, the Minister of State for Commerce and Industry C R Chaudhary has said that India is engaged with the US for an amicable solution on the issue of imposing retaliatory customs duties against America’s move to hike tariffs on certain steel and aluminium products. The country has notified imposition of retaliatory tariffs on 29 commodities which would come into effect from August 4. He also said the US had unilaterally hiked import duties on Indian steel and aluminium imports.

The minister further said India has already filed a request for consultations with the US on the imposition of additional duties of 25% on imports of steel and 10% on aluminium, at World Trade Organisation (WTO). Besides, seeking consultation is the first step of dispute settlement process. If the two nations are not able to reach a mutually agreed solution through consultation, India may request for a WTO dispute settlement panel to review the matter.

In 2017-18, India exported steel and steel products worth $1.98 billion to the US out of which exports of $0.62 billion fall under the tariff lines on which America has imposed customs duties of 25%. Chaudhary said that as per the report of the investigation conducted by US Department of Commerce, out of 35,927,141 tonnes of steel products imported by the US in 2017, imports from India were only 854,026 tonnes, around 2.4% of total US imports.

Separately, the minister said that the WTO had set up a panel to check India's compliance with last year's ruling on solar power programme. He added that this was set up on India's request to prove that India has fully complied with the recommendations and rulings of the WTO Dispute Settlement Body. The US has filed a retaliation request stating that India has not complied fully with the recommendations and panel rulings of the dispute settlement body of the WTO.

The CNX Nifty is currently trading at 10947.40, down by 33.05 points or 0.30% after trading in a range of 10936.95 and 11006.50. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.68%, Bharti Airtel up by 1.40%, Mahindra & Mahindra up by 1.11%, Hindustan Unilever up by 1.09% and Titan Co was up by 1.04%. On the flip side, Bharti Infratel down by 4.91%, HPCL down by 3.74%, Hindalco down by 3.23%, UPL down by 2.85% and BPCL was down by 2.44% were the top losers.

Asian markets are trading mixed; Taiwan Weighted gained 21.14 points or 0.19% to 10,863.60, Straits Times rose 30.86 points or 0.94% to 3,271.36, Jakarta Composite surged 16.96 points or 0.29% to 5,907.69 and Hang Seng was up by 6.35 points or 0.02% to 28,123.77. On the other side KOSPI slipped 5.58 points or 0.24% to 2,284.53, Shanghai Composite fell 15.12 points or 0.55% to 2,772.14 and Nikkei 225 decreased 22.80 points or 0.1% to 22,771.39.