Benchmarks trade lower in early deals; Nifty breaches10,500 level

Indian equity benchmarks made a pessimistic start and are trading lower with a cut of around half a percent, breaching their crucial 10,500 (Nifty) and 35,000 (Sensex) levels, as traders remained on sidelines ahead of the Reserve Bank of India’s (RBI) policy decision coupled with weak global cues. Street expecting that the RBI will raise rates for a third time since June on Friday to combat inflationary pressures as it grapples with a weakening rupee, surging oil prices and market instability sparked by a major non-bank finance firm’s defaults. Traders remain concerned about Union minister Nitin Gadkari’s statement that the country is facing lot of economic crisis due to crude oil imports and need to reduce imports and increase exports. Some cautiousness also crept in with a private report that liberalising foreign borrowings for oil companies to raise to $10 billion will not have a material impact on arresting the slide of the rupee.

Global cues too remained sluggish with Asian counters trading in red amid region-wide concern over a strengthening greenback and higher United States Treasury yields. The US markets ended lower on Thursday, as US Treasury yields surged to multi-year highs on robust economic data and upbeat comments from the Federal Reserve, sparking fears of accelerating inflation.

Back home, oil and gas stocks edged lower after Finance Minister Arun Jaitley said that Oil Marketing Companies (OMCs) will absorb Re 1 per litre on fuel. There will be some buzz in the banking sector stocks with Crisil’s report that state-run lenders will narrow down their losses to Rs 500 billion in fiscal year 2018-19, from Rs 850 billion in the previous fiscal year, as the quantum of dud loans reduce. Stocks related to metal sector too edged lower with ICRA’s report that the global prices of non-ferrous metals which have witnessed a correction due to global macroeconomic concerns in the last three months is unlikely to go down further.

The BSE Sensex is currently trading at 34951.97, down by 217.19 points or 0.62% after trading in a range of 34831.95 and 35118.54. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index shed 0.42%, while Small cap index was down by 0.12%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.67%, Healthcare up by 0.99%, IT up by 0.68%, TECK up by 0.65% and Telecom was up by 0.45%, while Oil & Gas down by 10.07%, Energy down by 4.53%, PSU down by 4.45%, Utilities down by 1.86% and Metal was down by 1.82% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.11%, Indusind Bank up by 1.86%, Tata Motors up by 1.43%, Tata Motors - DVR up by 1.33% and Yes Bank up by 1.30%. On the flip side, ONGC down by 11.04%, Vedanta down by 3.56%, Bajaj Auto down by 1.97%, Reliance Industries down by 1.74% and Hindustan Unilever down by 1.52% were the top losers.

Meanwhile, in an effort to ease inflationary pressure and boost consumer confidence, the government has decided to reduce the central excise duty levied on petrol and diesel by Rs 1.50 per litre. In addition to this, the oil marketing companies (OMCs) will cut their prices by Re 1, resulting in an effective fuel price cut of Rs 2.50 a litre.

Finance minister Arun Jaitley has said the excise duty cut would have an impact of Rs 10,500 crore on central government’s tax revenues. He also told state governments to follow suit by cutting a sales tax or value-added tax (VAT) by a similar amount. The reduction followed petrol and diesel prices touching new highs.

Jaitley said the move followed Brent crude oil touching four-year high of $86 a barrel on October 03 and interest rates in US reaching seven-year high. However, he added that inflation in India is still moderate at less than 4% and higher direct tax collections give comfort with regard to fiscal deficit. He also said domestic macroeconomic indicators are strong and stable, except for current account deficit (CAD).

The CNX Nifty is currently trading at 10486.80, down by 112.45 points or 1.06% after trading in a range of 10447.95 and 10540.65. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Titan Co up by 3.61%, Eicher Motors up by 2.37%, Indiabulls Housing up by 2.37%, Sun Pharma up by 2.33% and Bharti Infratel up by 1.93%. On the flip side, HPCL down by 20.01%, BPCL down by 19.01%, Indian Oil Corporation down by 13.86%, GAIL India down by 10.46% and ONGC down by 9.95% were the top losers.

Asian markets are trading in red; Nikkei 225 decreased 125.38 points or 0.53% to 23,850.24, Taiwan Weighted tumbled 215.18 points or 2.05% to 10,503.73, Straits Times dropped 30.43 points or 0.95% to 3,201.16, Jakarta Composite shed 19.92 points or 0.35% to 5,736.70, Hang Seng fell 111.22 points or 0.42% to 26,512.65 and KOSPI was down by 10.04 points or 0.44% to 2,264.45.