Local equities turn negative

Local equity benchmarks erased all the initial gains to turn negative in morning session, with Sensex losing quarter a percent and Nifty trading just below the neutral line. Selling among FMCG, Auto and Energy weighed on the markets. However, Midcaps and Small cap are outperforming the benchmarks so far. Traders failed to get any sense of relief the commerce ministry’s report that India will impose duties on imports within the norms of the World Trade Organisation (WTO) to protect domestic industry and boost the economy. The market participants also failed to take support with a report that government’s finances have shown improvement in August with fiscal deficit at 94.7% of the Budget Estimate (BE), mainly on account of better expenditure management. The deficit was at 96.1% of BE at August-end of the last financial year. Besides, Food Processing Minister Harsimrat Kaur Badal stated that the foreign direct investment (FDI) in the food processing sector has already touched the $1-billion mark so far this year.

On the global front, Asian markets were trading mostly in green, despite the mixed cues overnight from Wall Street and ahead of the US Federal Reserve's monetary policy decision due later in the day. Back home, on the sectoral front, most of the Sugar Stocks were trading higher, as Cabinet is likely to consider the Rs 4,500 crore package for sugar industry. Beside, banking stocks remained in limelight after Finance Minister Arun Jaitley stated that the country is on the right track for overcoming the ‘legacy issue’ of the non-performing assets (NPAs).

The BSE Sensex is currently trading at 36557.91, down by 94.15 points or 0.26% after trading in a range of 36557.91 and 36938.74. There were 9 stocks advancing against 21 stocks declining, while 1 stock remained unchanged 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 0.24%.

The top gaining sectoral indices on the BSE were Realty up by 1.00%, Healthcare up by 0.82%, Capital Goods up by 0.41%, Basic Materials up by 0.30% and Telecom was up by 0.29%, while FMCG down by 1.42%, Auto down by 0.51%, Energy down by 0.36%, IT down by 0.32% and PSU was down by 0.25% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.32%, Mahindra & Mahindra up by 1.40%, Tata Steel up by 1.11%, HDFC Bank up by 1.02% and Sun Pharma was up by 0.77%. On the flip side, ITC down by 2.51%, Tata Motors down by 2.05%, Wipro down by 1.59%, Maruti Suzuki down by 1.58% and Power Grid was down by 1.48% were the top losers.

Meanwhile, expressing optimism on growth of Indian economy, Finance Minister Arun Jaitley has said the new insolvency law, indirect tax regime and demonetization will help drive the country’s growth rate and sustain it at 8%. He added that there was a need to trust the banking system for meeting the needs of the economy and asked banks to, in turn, ensure clean lending to justify the trust reposed in them. He also said banks must strive to be seen always as institutions of clean and prudent lending.

Finance Minister said the Insolvency and Bankruptcy Code (IBC), Goods and Services Tax (GST), demonetization and digital payments had enabled better assessment of financial capacity and risks which, coupled with inclusive growth, had unlocked the purchasing power which would drive India’s growth. He added that a growing economy will also help banks grow in strength. He highlighted the need to have trust and confidence in the banking system as a necessary precondition for meeting the needs of the economy. He said with the recent amendment to the Prevention of Corruption Act, there now need not be any apprehension in the minds of bankers in supporting investments that are in the best interests of the economy, the nation and the banks.

Jaitley noted that the perception regarding the health of PSBs had become more positive as banks had posted positive results in terms of resolution, recovery, provisioning and credit growth. At the same time, he exhorted the banks to ensure all steps at their end to ensure clean lending and effective action in cases of fraud and wilful default. Noting the positive results from the Insolvency and Bankruptcy Code mechanism, he said there is need to assess and revisit the efficacy of the Debts Recovery Tribunal (DRT) mechanism, particularly in view of the long time taken in disposal of cases.

The CNX Nifty is currently trading at 11058.60, down by 8.85 points or 0.08% after trading in a range of 11043.25 and 11145.55. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing up by 5.69%, Yes Bank up by 3.48%, GAIL India up by 1.89%, Lupin up by 1.75% and Mahindra & Mahindra was up by 1.71%. On the flip side, ITC down by 2.71%, Tata Motors down by 2.18%, HCL Technologies down by 1.82%, Power Grid was down by 1.58% and Hindustan Unilever down by 1.52% were the top losers.

Asian markets were trading mostly in green, Shanghai Composite gained 35.29 points or 1.25% to 2,816.43, Jakarta Composite rose 29.97 points or 0.51% to 5,904.27, Hang Seng surged 442.47 points or 1.58% to 27,941.86, Straits Times soars 20.50 points or 0.63% to 3,256.58 and Nikkei 225 was up by 45.02 points or 0.19% to 23,985.28.

On the other side, Taiwan Weighted was down by 21.66 points or 0.2% to 10,957.19.