Markets trade lower in early deals

Indian equity benchmarks have made a pessimistic start and are trading in red territory in early deals on Tuesday, with cut of over quarter a percent, tracking weakness in global markets. Heavy selling in Metal, IT and Basic Materials counters are dragging markets lower. While, Yes Bank, Tata Steel, Hindalco and Maruti Suzuki are amongst the top losers. Traders took note of a report which signaled only a temporary truce, stated the Reserve Bank of India (RBI) and the government on Monday agreed to refer to an expert committee the contentious issue of appropriate size of reserves that the RBI must hold, while restructuring of stressed loans of small businesses would be considered by the central bank. However, down side remained capped with the RBI’s statement that it will inject Rs 8,000 crore into the system through purchase of government securities on November 22. The OMO operation will help ease tight liquidity situation triggered by series of default by group companies of IL&FS. Meanwhile, Commerce and Industry Minister Suresh Prabhu has said that development of industrial park rating system would help increase competitiveness of industries and promotion of the manufacturing sector.

On the global front, Asian markets are trading in red at this point of time, tailing the weak cues from Wall Street as technology firms bore the brunt of worries about slackening demand, adding to pessimism about a breakthrough in trade tensions. Meanwhile, Japanese car giant Nissan and Mitsubishi plunged on report that chairman Carlos Ghosn had been arrested over alleged financial misconduct.

Back home, sugar sector stocks came in limelight with Indian Sugar Mills Association’s (ISMA) statement that sugar production in the country until November 15 has been 1.16 million tonnes, compared to 1.37 million tonnes during the corresponding period last year. Also, power sector stocks buzzing with ICRA’s report that state power distribution companies (discoms) will have to shell out nearly Rs 2,000 crore as one-time compensation towards Goods and Services Tax (GST) impact to solar power developers.

The BSE Sensex is currently trading at 35666.79, down by 108.09 points or 0.30% after trading in a range of 35623.10 and 35731.67. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.18%, while Small cap index was down by 0.19%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.98%, Energy up by 0.44%, Telecom up by 0.26%, Utilities up by 0.26%, PSU up by 0.02%, while Metal down by 1.16%, IT down by 0.95%, Basic Materials down by 0.77%, TECK down by 0.74% and Healthcare was down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.59%, Tata Motors up by 1.41%, Adani Ports & SEZ up by 1.34%, Asian Paints up by 0.91% and Mahindra & Mahindra was up by 0.84%. On the flip side, Yes Bank down by 4.90%, Tata Steel down by 1.60%, Maruti Suzuki down by 1.02%, Vedanta down by 0.97% and HDFC was down by 0.92% were the top losers.

Meanwhile, amid recent liquidity concerns, the Reserve Bank of India (RBI) has decided to infuse Rs 8,000 crore through purchase of the government securities (G-secs) under Open Market Operations (OMO) on November 22, 2018. The Central Bank has decided this based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward. The OMO will help ease tight liquidity situation triggered by series of default by group companies of Infrastructure Leasing & Financial Services (IL&FS).

As part of the OMO, RBI will purchase government securities maturing in 2021 bearing interest rate of 7.80%, 2024 (8.40%), 2026 (8.33%), 2028 (8.60%) and 2032 (8.28%). The Central Bank said it has the right to decide on the quantum of purchase of individual securities and can also accept offers for less than Rs 8,000 crore. It may as well purchase marginally higher than the aggregate amount due to rounding-off effect and it can also accept or reject any or all the offers either wholly or partially without assigning any reason. The eligible participants should submit their offers in electronic format on the RBI Core Banking Solution (E-Kuber) system on November 22.

RBI had earlier stated that the system liquidity will move into deficit in the second half of 2018-19 and the evolving liquidity conditions would determine its choice of instruments for both transient and durable liquidity management. OMOs are the tools which can be used to either inject or drain liquidity from the system. It is employed to adjust rupee liquidity conditions in the market on a durable basis.

The CNX Nifty is currently trading at 10,730.80, down by 32.60 points or 0.30% after trading in a range of 10,710.75 and 10,740.85. There were 16 stocks advancing against 33 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were GAIL India up by 2.52%, HPCL up by 2.19%, Indusind Bank up by 1.65%, Eicher Motors up by 1.36% and Tata Motors was up by 1.33%. On the flip side, Tech Mahindra down by 3.11%, Yes Bank down by 2.59%, Hindalco down by 2.58%, HCL Tech down by 2.37% and Tata Steel was down by 1.60% were the top losers.

Asian markets are trading in red; Taiwan Weighted declined 84.01 points or 0.86% to 9,744.68, KOSPI tumbled 22.64 points or 1.09% to 2,077.92, Shanghai Composite fell 44.14 points or 1.66% to 2,659.37, Hang Seng lost 481.65 points or 1.86% to 25,890.35, Nikkei 225 slipped 229.58 points or 1.06% to 21,591.58 and Straits Times was down by 37.65 points or 1.24% to 3,027.42.