Benchmarks trade lower in early deals on feeble global cues

Pressurized by feeble global cues, Indian equity benchmarks are trading lower in early deals on Monday with frontline gauges breaching their crucial 36,700 (Sensex) and 11,100 (Nifty) levels. Sentiments remain dampened on industry chamber CII’s report that over 40 per cent of Indian firms expect the Reserve Bank of India (RBI) will go in for another interest rate hike in the current fiscal. A CII release said that its quarterly Business Confidence Index (BCI), conducted during July-September 2018, covered nearly 200 firms of varying sizes. In the current survey, about 42 per cent of the respondents felt that the RBI will engage in further interest rates hikes in 2018-19 as compared to the previous survey where a majority of the respondents anticipated a cut or no change in policy rates in 2018-19. Traders remain concerned with report that overseas investors have pulled out a massive Rs 15,365 crore from the capital markets till September 21, after putting in funds during the previous two months, on widening current account deficit coupled with global trade tensions. Traders shrugged off report that Fitch Ratings has raised India’s growth forecast for the current fiscal to 7.8 percent, from 7.4 percent projected earlier. In its Global Economic Outlook, Fitch, however, flagged tightening of financial conditions, rising oil bill and weak bank balance sheets as headwinds to growth.

Global cues too remained sluggish with Asian markets are trading mostly in red at this point of time, as China canceled upcoming tariff talks with the United States, while oil prices jumped after top producers including Russia ruled out boosting crude output. The US markets ended mostly in red on Friday, ahead of Federal Reserve meeting amid a quiet day on the U.S. economic front.

Back home, traders failed to get any sense of relief with report that the southwest monsoon is expected to start withdrawing towards the end of this month, nearly a month behind schedule. This year’s delayed withdrawal is likely to help the country avoid a drought situation, even as countrywide rainfall is hovering on borderline drought conditions, measuring 10% below normal levels since the beginning of the monsoon season. In scrip specific developments, Usha Martin strengthened on inking agreement for sale of steel business to Tata Steel and Cipla edged higher on getting final approval for Albendazole Tablets.

The BSE Sensex is currently trading at 36672.01, down by 169.59 points or 0.46% after trading in a range of 36616.87 and 36945.50. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.19%, while Small cap index was down by 1.40%.

The top gaining sectoral indices on the BSE were IT up by 0.85%, Energy up by 0.58%, Oil & Gas up by 0.54%, Metal up by 0.44% and TECK was up by 0.41% while, Realty down by 3.03%, Telecom down by 2.38%, Auto down by 1.86%, Consumer Discretionary Goods & Services down by 1.68%, Consumer Durables was down by 1.54% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.06%, ONGC up by 1.83%, Vedanta up by 1.81%, Coal India up by 1.31% and Hindustan Unilever up by 0.65%. On the flip side, Maruti Suzuki down by 2.74%, Bharti Airtel down by 2.65%, Mahindra & Mahindra down by 2.62%, Kotak Mahindra Bank down by 2.34% and Indusind Bank down by 2.25% were the top losers.

Meanwhile, global rating agency, Fitch Ratings has raised India’s growth forecast for FY19 to 7.8 per cent from 7.4 per cent earlier. The upward revision in growth forecast for current fiscal comes in the backdrop of GDP expanding 8.2 per cent in April-June quarter, higher than Fitch’s expectation of 7.7 per cent. This robust performance was partly attributable to a powerful base effect, with GDP growth dampened in April-June quarter of 2017 by companies de-stocking ahead of the rollout of the goods and services tax.  Growth forecast for 2019-20 and 2020-21 fiscals, however, have been cut by 0.2 percentage points to 7.3 per cent.

However the rating agency, in its Global Economic Outlook, has highlighted rising oil bill and higher interest rates as key concerns. It expects inflation to rise to the upper end of the central bank’s target band (4 per cent, plus-minus 2 per cent) on relatively high demand-pull pressures and rupee depreciation. Fitch said the Indian rupee has been the worst-performing major Asian currency so far this year.

Further, the rating agency said that the fiscal policy should remain quite supportive of growth in the run-up to elections likely to be held in early 2019. The investment/GDP ratio has stopped trending down, helped by ramped-up public infrastructure outlays, in particular by state-owned enterprises (SOEs).

The CNX Nifty is currently trading at 11079.70, down by 63.40 points or 0.57% after trading in a range of 11063.30 and 11170.15. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.88%, Tech Mahindra up by 1.88%, ONGC up by 1.69%, Vedanta up by 1.48% and Coal India up by 1.45%. On the flip side, Bajaj Finance down by 4.60%, Indiabulls Housing down by 3.78%, Ultratech Cement down by 3.18%, Mahindra & Mahindra down by 2.94% and Bharti Airtel down by 2.63% were the top losers.

Asian markets are trading mostly in red; Jakarta Composite decreased 57.91 points or 0.98% to 5,899.83 and Hang Seng was down by 350.50 points or 1.27% to 27,603.08. On the flip side, Straits Times was up by 12.67 points or 0.39% to 3,230.35.