Markets witness choppiness in early deals

Indian equity benchmarks have made a cautious start and are trading choppy in early deals amid weak global cues. Traders remain concerned with report that in an escalation to the trade war with China, US President Donald Trump announced imposition of new tariffs on additional $200 billion worth of Chinese imports. On the domestic turf, market participants remain cautious with International Monetary Fund’s (IMF) estimates that the real effective depreciation of Indian rupees is between 6-7% compared to December 2017. It said broadly since the beginning of the year, Indian rupee has lost about 11% of its value in nominal terms vis-a-vis the US dollar. However, losses remained capped as some relief came with CBDT Chairman Sushil Chandra expressing confidence in exceeding Rs 11.5 lakh crore direct tax collection target in current fiscal. Some support also came with report stating that Markets regulator SEBI has relaxed initial public offer (IPO) norms to allow companies to announce the price band two days before an offering.

On the global front, Asian markets are trading mostly in red at this point of time following an escalation in trade tensions between the US and China. The US markets ended lower on Monday as lingering trade concerns weighted on the sentiments. Markets extended losses after President Donald Trump said an announcement on US-China trade will be coming after the close of trading.

Back home, banking sector stocks edged lower with India Ratings’ mid-year outlook showing that banks are witnessing a spurt in asset quality stress in the non-corporate segment and the overall loan loss provisions for lenders are expected to stay elevated till fiscal year 2019-20. Copper sector related stocks remained in focus with report that India has initiated an anti-subsidy probe into increased imports of select copper wire rods from Indonesia, Malaysia, Thailand and Vietnam.

The BSE Sensex is currently trading at 37559.17, down by 26.34 points or 0.07% after trading in a range of 37532.29 and 37745.44. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index edged up 0.03%, while Small cap index up by 0.07%.

The top gaining sectoral indices on the BSE were FMCG up by 0.62%, Consumer Durables up by 0.51%, Healthcare up by 0.40%, Oil & Gas up by 0.32% and Consumer Discretionary Goods & Services up by 0.27%, while PSU down by 0.51%, Realty down by 0.45%, Telecom down by 0.44%, TECK down by 0.39% and Power was down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.70%, Yes Bank up by 1.77%, Asian Paints up by 1.51%, ONGC up by 1.05% and Mahindra & Mahindra up by 0.74%. On the flip side, Tata Motors - DVR down by 2.02%, Tata Motors down by 1.48%, SBI down by 1.37%, Power Grid Corporation down by 1.36% and Vedanta down by 1.34% were the top losers.

Meanwhile, amid fall of the Indian currency in the last few months, the International Monetary Fund (IMF) has estimated that the real effective depreciation of Indian rupees is between 6% and 7% compared to December 2017. It said broadly since the beginning of the year, Indian rupee has lost about 11% of its value in nominal terms vis-a-vis the US dollar. Though, he added that the currencies of many of India’s trading partners, including those in the emerging markets, too have depreciated against the dollar.

IMF also said that contribution of the net exports to growth in the April to June quarter was again stronger than expected and the real depreciation of the rupee can be expected to reinforce this trend as India is a relatively closed economy. On the other hand, the depreciation will obviously raise the prices of imported goods such as oil and petroleum products, potentially putting an upward pressure on inflation. It noted that the Reserve Bank of India has taken the rising oil import prices into the account when it raised the policy rates in its last two meetings.

The agency further said the Indian economy is recovering strongly from the two transitory disruptions in recent years - the Goods and Services Tax (GST) and demonetisation process. Growth has been gradually accelerating in recent quarters, with strength in both consumption and investment, which have helped the economy. Besides, the IMF continues to assess the impact of demonetisation on an ongoing basis. It said as with most things, there have been pluses and there have been minuses of demonetisation.

The CNX Nifty is currently trading at 11370.90, down by 6.85 points or 0.06% after trading in a range of 11359.80 and 11411.45. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.68%, Yes Bank up by 1.79%, UPL up by 1.44%, Dr. Reddys Lab up by 1.27% and Asian Paints up by 1.16%. On the flip side, Tech Mahindra down by 1.75%, Power Grid Corporation down by 1.73%, Tata Motors down by 1.52%, Vedanta down by 1.45% and SBI down by 1.31% were the top losers.

Asian markets are trading mostly in red; Taiwan Weighted decreased 68.30 points or 0.63% to 10,760.31, Straits Times declined 18.18 points or 0.58% to 3,123.22, Jakarta Composite shed 20.57 points or 0.35% to 5,803.69, Hang Seng dropped 200.18 points or 0.75% to 26,732.67 and Shanghai Composite was down by 3.26 points or 0.12% to 2,648.53. On the flip side, Nikkei 225 surged 337.32 points or 1.44% to 23,431.99 and KOSPI was up by 1.27 points or 0.06% to 2,304.28.