Markets make pessimistic start to the new month

Indian equity benchmarks made a pessimistic start and are trading in red in early deals, as traders remained on sidelines ahead of manufacturing PMI data to be released later in the day. Investors also looking ahead to the Reserve Bank of India’s (RBI) outcome of the policy meeting on October 05, for further cues. Sentiments remain dampened with the RBI's report that India’s external debt declined 2.8% to $514.4 billion at June-end over the previous quarter on account of a decrease in commercial borrowings, short-term debt and non-resident Indian (NRI) deposits. Traders also remain concerned with report that overseas investors pulled out a massive Rs 21,000 crore ($3 billion) from the capital markets in September, making it the steepest outflow in four months, on widening current account deficit amid global trade tensions.

On the global front, Asian markets exhibiting mixed trend at this point of time. Regional volumes are likely to be light, due to holidays in China including Hong Kong. The US markets ended mostly higher on Friday but the gains were limited after economic data painted a mixed picture of the economy. Investors shrugged off trade worries, focusing instead of strong economic data and corporate earnings.

Back home, stocks related to telecom sector edged lower despite Fitch’s latest report that the new telecom policy will help companies in serving growing data needs, cut costs and reduce red tape. It added private telecom companies’ growth will be supported as the NDCP focuses to expand broadband coverage funded by the universal service obligation fund and in partnership with private telcos. In scrip specific developments, GMR Infrastructure edged higher with arm emerging as highest bidder for privatisation of Nagpur Airport and IEX surged on achieving new record high trade of 306 MU.

The BSE Sensex is currently trading at 36186.86, down by 40.28 points or 0.11% after trading in a range of 36083.00 and 36291.51. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.70%, while Small cap index was down by 1.33%.

The top gaining sectoral indices on the BSE were Utilities up by 0.90%, IT up by 0.85%, TECK up by 0.73%, Power up by 0.61% and Metal was up by 0.54%, while Consumer Durables down by 1.72%, Capital Goods down by 1.39%, Industrials down by 1.09%, Realty down by 1.06% and Consumer Discretionary Goods & Services was down by 0.95% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 5.26%, Infosys up by 1.39%, SBI up by 1.23%, TCS up by 1.10% and Power Grid Corporation up by 0.93%. On the flip side, Kotak Mahindra Bank down by 4.77%, Indusind Bank down by 2.79%, Bharti Airtel down by 2.16%, Larsen & Toubro down by 1.52% and Axis Bank down by 1.38% were the top losers.

Meanwhile, expressing hopes on growth of India, Finance Minister Arun Jaitley stated that the ongoing global trade war may have created ‘initial instability’, but will gradually open up opportunities for India to emerge as a bigger trading and manufacturing base. The Trump administration’s decision to impose tariffs on aluminium and steel imports has triggered a trade war with several countries including China, which have announced retaliatory measures.

Jaitley further said some global trends do ‘adversely affect’ India, but going ahead they will open up avenues for the country to grow faster. He said ‘The trade war initially created instability, but eventually may open up greater markets. They will open up India as a bigger trading and manufacturing base and, therefore, we must closely watch the situation as to when the challenge turns into an opportunity.’

Noting that India has been growing faster than major economies in the world, he said ‘I won’t be surprised if for several years to come we continue in that direction. There are opportunities for growth. This is our opportunity to catch up on the slow growth we have experienced in the past. We still have avenues for faster growth.’ He added that faster growth rate means more jobs, more revenues for government and an enriched government spends more money on development.

The Minister said in the last few years formalisation of economy has taken place and Goods and Serives Tax (GST) and demonetisation has helped in this. The number of income tax assessed has hugely increased and assesses registered under GST too have gone up by 74% over earlier indirect tax regime. However, referring to rising oil prices in the international market, he said that it poses a challenge for the economy since India is a net importer of crude oil. The country imports 81% of its oil needs.

The CNX Nifty is currently trading at 10883.45, down by 47.00 points or 0.43% after trading in a range of 10855.60 and 10931.90. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing up by 4.22%, Yes Bank up by 4.08%, Bharti Infratel up by 2.55%, Hindalco up by 1.46% and GAIL India up by 1.28%. On the flip side, Kotak Mahindra Bank down by 4.78%, Bharti Airtel down by 2.97%, Indusind Bank down by 2.96%, Bajaj Finance down by 2.77% and Ultratech Cement down by 2.53% were the top losers.

Asian markets are trading mixed; Nikkei 225 increased 101.96 points or 0.42% to 24,222.00, Taiwan Weighted gained 35.00 points or 0.32% to 11,041.34 and Straits Times was up by 8.85 points or 0.27% to 3,265.90. On the flip side, Jakarta Composite decreased 18.28 points or 0.31% to 5,958.27 and KOSPI was down by 6.15 points or 0.26% to 2,336.92.