Weakness persists in markets; Nifty below 11,300 mark

Indian benchmark indices continued to trade in red terrain in early afternoon session, on account of selling in frontline blue chip counters. The mood on the street remained cautious ahead of the Reserve Bank of India’s (RBI) monetary policy outcome. Some anxiety remained among the local traders with Moody’s Investors Service’s report which stated that the GST Council’s decision to lower rates on several goods and also rationalise rates on some services will impact government’s fiscal consolidation effort. However, the markets trimmed some of their losses, as traders found some support with Crisil’s report that India is much better placed than many other emerging market peers or compared to its own situation in 2013 during the taper tantrum, to tackle risks arising out of asymmetry in monetary policy of advanced economies, the rise in crude prices and the escalation of trade war tension. On the sectoral front, steel sector remained in focus after India Ratings expects the domestic steel industry's operational and financial performance to continue to improve, backed by steady sales realisations and higher margins -- supported by an improved demand-supply balance.

On the global front, Asian markets were trading mixed, as investors awaited a statement from the Bank of Japan’s policy meeting. Back home, the BSE Sensex is currently trading at 37398.83, down by 95.57 points or 0.25% after trading in a range of 37298.75 and 37534.95. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.21%, while Small cap index was up by 0.10%.

The top gaining sectoral indices on the BSE were Realty up by 1.49%, Healthcare up by 0.70%, Energy up by 0.52%, Utilities up by 0.52% and Consumer Disc up by 0.43%, while Bankex down by 0.55%, Metal down by 0.52%, PSU down by 0.36%, Basic Materials down by 0.25%, FMCG down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.69%, Sun Pharma up by 1.86%, Bajaj Auto up by 1.65%, Bharti Airtel up by 1.27% and Reliance Industries up by 1.24%. On the flip side, Tata Motors - DVR down by 2.24%, HDFC down by 2.12%, Vedanta down by 1.36%, Tata Steel down by 1.35% and ICICI Bank down by 1.17% were the top losers.

Meanwhile, global rating agency Standard and Poor's (S&P) has said that India's infrastructure deficit is simply too large to eliminate any time soon. It also said that infrastructure takes time to build, and perhaps more so in India than for many other countries. It also noted that India is making progress at scaling up its infrastructure, but still has a long way to go before it can close the sizable deficit between supply and demand. It added that the Indian government estimates around $4.5 trillion worth of investments are required till 2040 to develop infrastructure to improve economic growth and community well being.

In an article titled 'India's Infrastructure Marathon: Why Steady Growth Can't Close The Supply Gap', S&P has said that project delays and cost overruns are attributable to complex land acquisitions and environmental issues and in all democracies, societal considerations play a part, too. It stated that the country's progress at scaling up its infrastructure is shown in its decreasing power deficits, high passenger growth for airports, rising renewable capacity, and large metro train projects in progress. It added that the government is leading the buildup in view of growing urbanization.

The rating agency believed that the power sector is moving towards equilibrium in demand and supply from a deficit situation. However, it said that fortunes will vary for thermal and renewables. It pointed out that the infrastructure sector has high correlation with the overall economic environment. It noted that macroeconomic roadblocks could strain the government's budget or reduce project returns for the private sector. It mentioned that these risks include currency weakness, global trade protectionism, and rising inflationary strains that could push up interest rates. Elections scheduled for 2019 could also fuel political and policy uncertainty.

The CNX Nifty is currently trading at 11295.90, down by 23.65 points or 0.21% after trading in a range of 11267.75 and 11312.65. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.84%, Hero MotoCorp up by 2.24%, Sun Pharma up by 2.04%, HCL Tech. up by 1.73% and Bharti Airtel up by 1.46%. On the flip side, Indiabulls Housing Finance down by 2.85%, Eicher Motors down by 2.82%, HDFC down by 2.15%, BPCL down by 2.05% and Axis Bank down by 1.50% were the top losers.

Asian markets were trading mixed; Taiwan Weighted increased 23.97 points or 0.22% to 11,057.51, KOSPI surged 1.75 points or 0.08% to 2,295.26, Nikkei 225 rose 8.88 points or 0.04% to 22,553.72 and Straits Times was up by 8.28 points or 0.25% to 3,315.43. On the flip side, Hang Seng decreased 134.67 points or 0.47% to 28,598.46, Shanghai Composite shed 4.82 points or 0.17% to 2,864.23 and Jakarta Composite was down by 97.73 points or 1.65% to 5,930.21.