Benchmarks trade marginally in red in early deals

Indian equity benchmarks are trading marginally in red in early deals, as traders remain concerned about a SBI research report stating that the Gross Domestic Product (GDP) growth in the September quarter is expected to decelerate to 7.5-7.6% over the previous three-month period mainly due to a slowdown in rural demand. Traders also reacted negatively on India Ratings and Research’s statement that India is set to miss its fiscal deficit target for the year ending March 2019 due to a shortfall in revenues and lower-than-targeted disinvestment proceeds. The country’s 2019 fiscal deficit target has been pegged at 3.3% of its GDP or Rs 6.24 trillion ($88.45 billion). But the credit rating agency estimated fiscal deficit at Rs 6.67 trillion - or 3.5% of GDP. However, losses remain capped as traders took some support with the think-tank’s Vice-Chairman Rajiv Kumar’s statement the Niti Aayog is exploring ways to encourage more domestic companies to be among the top multinational corporations in the world.

On the global front, Asian markets are trading mixed at this point of time as President Donald Trump discussed plans for further China tariff increases in the absence of a trade deal. The US markets ended higher on Monday as shares of some beaten-down tech companies rebounded after posting steep losses last week.

Back home, banking sector stocks are trading mostly in green with report that the government will infuse Rs 420 billion in the state-owned banks by March-end and the next tranche would be released as early as next month. In scrip specific developments, Unichem Laboratories edged higher on getting EIR from USFDA, while Cords Cable jumped on getting pre-qualified supplier approval from AAI.

The BSE Sensex is currently trading at 35317.79, down by 36.29 points or 0.10% after trading in a range of 35302.74 and 35407.05. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.07%, while Small cap index was up by 0.24%.

The top gaining sectoral indices on the BSE were Realty up by 0.78%, IT up by 0.52%, TECK up by 0.45%, Energy up by 0.40% and Telecom was up by 0.23%, while Metal down by 1.70%, Basic Materials down by 0.62%, Healthcare down by 0.43%, FMCG down by 0.28% and Consumer Discretionary Goods & Services was down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.60%, Yes Bank up by 1.54%, Tata Motors up by 0.74%, SBI up by 0.61% and Power Grid Corporation up by 0.61%. On the flip side, Sun Pharma down by 2.49%, Bajaj Auto down by 2.12%, Vedanta down by 1.86%, Tata Steel down by 1.81% and Asian Paints down by 1.44% were the top losers.

Meanwhile, in order to improve financial health of the public sector banks (PSBs), the government will inject Rs 42,000 crore into debt-laden PSBs by March-end. Besides, the next tranche of recapitalisation would be released as early as in the month of December. The Rs 42,000 crore capital infusion is part of the Rs 2.11 lakh crore, two-year, front-loaded bank recapitalisation plan announced by the government in October 2017 to support credit growth.

The large PSBs such as State Bank of India and Punjab National Bank (PNB) may not need more capital infusion from the government in the current financial year ending March 2019. PNB has already received regulatory capital twice so far. The government earlier this year pumped Rs 11,336 crore in five PSBs including PNB, Allahabad Bank, Indian Overseas Bank, Andhra Bank and Corporation Bank.

State-owned banks will need less capital to meet their capital adequacy norms, as the Reserve Bank of India recently decided to defer the deadline for them to meet the global norms or Basel-III requirement by a year till March 2020. The RBI Board, while deciding to retain the capital adequacy requirement for banks at 9%, agreed to extend the transition period for implementing the last tranche of 0.625% under the capital conservation buffer (CCB) by one year up to March 31, 2020.

The government announced Rs 2.11 lakh crore capital infusion programme in October last year. According to the plan, the PSBs were to get Rs 1.35 lakh crore through recapitalisation bonds, and the balance Rs 58,000 crore through the raising of capital from the market. Out of the Rs 1.35 lakh crore, the government has already infused about Rs 82,000 crore through the bonds.

The CNX Nifty is currently trading at 10614.10, down by 14.50 points or 0.14% after trading in a range of 10607.80 and 10635.80. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 1.70%, Infosys up by 1.69%, GAIL India up by 1.15%, Indiabulls Housing up by 1.02% and Grasim Industries up by 0.87%. On the flip side, JSW Steel down by 3.79%, Sun Pharma down by 2.92%, Bajaj Auto down by 2.02%, Vedanta down by 1.89% and Tata Steel down by 1.74% were the top losers.

Asian markets are trading mixed; Nikkei 225 gained 165.27 points or 0.75% to 21,977.27, Straits Times increased 6.08 points or 0.2% to 3,099.46, KOSPI added 13.84 points or 0.66% to 2,096.86 and Shanghai Composite was up by 10.93 points or 0.42% to 2,586.74.

On the flip side, Taiwan Weighted decreased 17.72 points or 0.18% to 9,747.64, Jakarta Composite shed 0.46 points or 0.01% to 6,022.32 and Hang Seng was down by 24.62 points or 0.09% to 26,351.56.