Benchmarks trade lower in early deals

Indian equity benchmarks are trading lower with a cut of around half a percent in early deals on Wednesday, as traders remain concerned with domestic rating agency Icra’s report stating that after the strong upswing in April-June quarter of current financial year (FY19), GDP growth for July-September quarter is expected to dip to 7.2 percent on account of sluggishness in agriculture and industry. The GDP had grown by a higher than expected 8.2 per cent in the first quarter of FY19 as compared to the year-ago period. Sentiments also remained pessimistic on report that India's crude oil imports in October rose to their highest level in at least more than seven years. Crude imports in October climbed 10.5 per cent from a year earlier to 21.02 million tonnes. Traders shrugged off report that the committee proposed by the RBI Board for examining the Economic Capital Framework (ECF) to determine the appropriate levels of reserve the central bank ought to hold will be constituted soon. The Central Board of the RBI had decided on an expert committee to look into the ECF. Currently, the capital base of the RBI is Rs 9.69 lakh crore.

Global cues too remained sluggish with most of the Asian markets trading in red at this point of time after another dive on Wall Street, where concerns have spread to the corporate-bond market. The US markets once again ended lower on Tuesday as US investors continued to be plagued by doubts surrounding slowing global growth, US-China trade relations, and the steady rise in interest rates that can be expected to continue into next year.

Back home, banking sector stocks remained in action on report that the Reserve Bank of India (RBI) estimates that Indian banks will have the capacity to lend an extra 2.5 trillion rupees to 3.0 trillion rupees ($35 billion to $42 billion) over the next year after it decided to relax a deadline for lenders to boost capital ratios. Shares of aviation, paint and oil marketing companies jumped in the opening deals on Wednesday, a day after the crude oil prices tumbled over 6 per cent with the US crude diving to its lowest level in more than a year.

The BSE Sensex is currently trading at 35311.85, down by 162.66 points or 0.46% after trading in a range of 35294.50 and 35494.25. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.16%, while Small cap index was down by 0.03%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.23%, Healthcare up by 1.02%, Realty up by 0.94%, Telecom up by 0.76% and PSU was up by 0.71%, while IT down by 2.50%, TECK down by 2.02%, Capital Goods down by 0.83%, Metal down by 0.82% and Power was down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 1.71%, Asian Paints up by 1.58%, ONGC up by 1.47%, Bharti Airtel up by 1.19% and Sun Pharma up by 0.74%. On the flip side, TCS down by 2.71%, Infosys down by 2.67%, Wipro down by 2.08%, Tata Steel down by 1.38% and Reliance Industries down by 1.23% were the top losers.

Meanwhile, domestic rating agency Icra in its latest report has said that GDP growth for second quarter of current financial (Q2FY19) is expected to dip to 7.2% on account sluggishness in agriculture and industry. The fall in the growth number will be mainly due to a pull down from industry where growth is expected to slow down to 7.1% in the in second quarter as compared to 10.3% in first quarter and the farm sector, which may slow down to 3.5% from 5.3%. The GDP had grown by a higher than expected 8.2% in the first quarter of the current financial year as compared to the year-ago period.

The report further highlighted that higher fuel prices and the weak rupee were pointed out as the primary factors dragging the industrial growth, while an uneven and sub-par monsoon, flooding in some areas amid a late withdrawal of the monsoon rains, and instances of crop damage and pest attacks will impact the farm sector.

Besides, Icra’s principal economist Aditi Nayar stated that pre-tax margins for companies have declined on a quarter-on-quarter basis because of a rise in the input and energy costs and the rupee depreciation.  Moreover she added “Overall, we expect manufacturing GVA (gross value added) growth to ease to 7.0% in Q2FY19 from the healthy 13.5% expansion in Q1FY19”.

The CNX Nifty is currently trading at 10622.40, down by 33.80 points or 0.32% after trading in a range of 10610.30 and 10671.30. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 6.83%, HPCL up by 4.15%, BPCL up by 3.92%, Indian Oil Corporation up by 3.09% and Yes Bank up by 2.45%. On the flip side, Infosys down by 3.34%, Tech Mahindra down by 3.14%, TCS down by 3.05%, HCL Tech. down by 2.61% and Wipro down by 2.05% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 decreased 75.37 points or 0.35% to 21,507.75, Taiwan Weighted slipped 27.59 points or 0.28% to 9,716.40, Jakarta Composite declined 44.35 points or 0.74% to 5,960.95, Hang Seng dipped 41.39 points or 0.16% to 25,798.95, KOSPI shed 9.49 points or 0.46% to 2,073.09 and Shanghai Composite was down by 3.39 points or 0.13% to 2,642.46. On the flip side, Straits Times was up by 12.55 points or 0.41% to 3,039.54.