Benchmarks trade flat in early deals on F&O expiry day

Indian equity benchmarks started the F&O expiry day on a cautious note and are trading flat in early deals on Thursday. Traders are getting some comfort with the United Nations Conference on Trade and Development (UNCTAD) expecting India’s economy to grow 7% in calendar year 2018 compared with 6.2% in 2017. The body said that an expansion in services and higher demand for exports has led to a moderate recovery in industrial production in its Trade and Development Report. Some solace also came with Finance Minister Arun Jaitley’s statement that India has large avenues of growth to sustain a GDP increase of 7-8 per cent for two decades, unlike any other major economy. However, market participants remained cautious with a United Nations trade report stating that the world economy remains on a shaky ground a decade after the 2008 financial crisis as the global economic growth is spasmodic and many economies are operating below potential.

On the global front, Asian markets are exhibiting mixed trend at this point of time as investors assessed commentary from the Federal Reserve that reaffirmed the US economy is strong enough to warrant another interest-rate increase by the end of this year. The US markets ended lower on Wednesday after the Federal Reserve confirmed it would continue to embark on tighter monetary policy.

Back home, telecom sector stocks rang loud with report that the government expects to attract $100 billion in investments and generate four million jobs in the telecom sector as it approved a new policy for the industry. The policy also envisages 50 Mbps of broadband connectivity to every citizen in five years. Banking sector stocks are exhibiting mixed trend with the Finance Ministry’s statement that it would examine the capital demands raised by public sector banks including Punjab National Bank and Central Bank.

The BSE Sensex is currently trading at 36,555.74, up by 13.47 points or 0.04% after trading in a range of 36,502.18 and 36,711.62. There were 15 stocks advancing against 15 stocks declining on the index, while 1 stock remained unchanged.

The broader indices were trading in red; the BSE Mid cap index declined 0.53%, while Small cap index was down by 0.24%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.57%, IT up by 0.44%, TECK up by 0.44%, Utilities up by 0.42% and Basic Materials was up by 0.41%, while Realty down by 1.38%, Healthcare down by 0.57%, Capital Goods down by 0.33%, FMCG down by 0.24% and Industrials was down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.68%, Bajaj Auto up by 1.28%, Infosys up by 0.98%, NTPC up by 0.92% and SBI up by 0.72%. On the flip side, Yes Bank down by 2.08%, HDFC down by 1.16%, Maruti Suzuki down by 0.66%, Axis Bank down by 0.47% and Hindustan Unilever down by 0.47% were the top losers.

Meanwhile, the United Nations Conference on Trade and Development (UNCTAD) in its latest report has forecasted that Indian economy is likely to grow 7% in calendar year 2018 as compared to 6.2% in 2017. It added that growing demand for exports has led to a moderate recovery in industrial production. Even though, the effects of demonetization are still evident in private consumption trends within the economy.

The body in its Trade and Development Report said that the resulting increase in capacity utilization in manufacturing along with a recapitalization of public banks has enabled a rise in investment for the first time in several years. But, at the same time, a disconcerting feature is the deceleration of growth in the primary sectors. The service sector is expanding with trade, hotels, transport and communication leading the way. As per the report, a lending spree by the banking system during the high growth years has led to the accumulation of large volumes of bad debt or non-performing assets in the balance sheets of leading banks. This, besides threatening financial stability, is curbing credit expansion and is likely to adversely affect investment and growth.

On the Indian currency, the UNCTAD said the Indian rupee is under pressure on foreign exchange markets. Over the first five months of 2018 the currency had depreciated by more than 7.5% relative to the dollar. Depreciation relative to other major currencies like the British pound, the euro and the yen, has been much less. Yet, the fall vis-a-vis the dollar is of significance, especially since much of the trade and foreign debt of India is denominated in dollars. A leading determinant of the depreciation is the rise in the current account deficit on the balance of payments of India intensified by the sharp rise in the international price of oil.

The CNX Nifty is currently trading at 11,050.25, down by 3.55 points or 0.03% after trading in a range of 11,042.50 and 11,089.45. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Titan Company up by 2.74%, GAIL India up by 2.13%, Ultratech Cement up by 1.98%, Asian Paints up by 1.55% and Eicher Motors up by 1.34%. On the flip side, Indiabulls Housing down by 5.31%, Yes Bank down by 2.12%, Bajaj Finance down by 1.66%, Dr. Reddys Lab down by 1.47% and UPL down by 1.38% were the top losers.

Asian markets are trading mixed; Taiwan Weighted increased 27.79 points or 0.25% to 11,001.98, Straits Times gained 15.68 points or 0.48% to 3,254.78, Jakarta Composite jumped 45.55 points or 0.77% to 5,918.82 and KOSPI was up by 8.30 points or 0.35% to 2,347.47.

On the flip side, Nikkei 225 declined 148.38 points or 0.62% to 23,885.41, Hang Seng dropped 123.87 points or 0.45% to 27,693.00 and Shanghai Composite was down by 11.02 points or 0.39% to 2,795.79.