Local equities continue to trade with caution

Local equity benchmarks continued to trade with caution in the morning session, owing to selling pressure in frontline blue-chip counters. Sun Pharma, Tata Steel and Bajaj Auto were the prime losers among heavy-weights. Market participants remained concerned with a report that Narendra Modi government has assured several times that despite financial year 2018-19 being a poll year. However, India Ratings has said that India will not be able to meet the target, mainly due to the shortfall in revenues. Sentiments remained cautions with State Bank of India (SBI) report which estimated the country’s economy to expand by 7.5-7.6 per cent, slower than the prior quarter, mainly on account of a slowdown in rural demand. However, losses remained capped with a report that India and China have amended the bilateral tax treaty which will help prevent tax evasion by allowing exchange of information. The Government of India and the People’s Republic of China have signed a protocol on November 26, 2018. Meanwhile, amid persisting concerns in the government over a liquidity squeeze in the non-bank lenders (NBFC) segment and its adverse effect on the financing of small businesses, the Reserve Bank of India has announced further easing of the hedging norms for external commercial borrowings (ECBs).

On the global front, Asian markets were trading mostly in green, ahead of a meeting between the US and China at the Group of 20 summit this week, despite President Donald Trump's comments that it's ‘highly unlikely’ he'll hold off on raising tariffs as Beijing requested. Back home, Finance Minister Arun Jaitley has held a closed-door meeting with industry captains to discuss the current economic environment and the steps being taken by the government to address emerging issues.

The BSE Sensex is currently trading at 35363.74, up by 9.66 points or 0.03% after trading in a range of 35264.19 and 35407.05. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.13%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were Realty up by 1.22%, IT up by 0.55%, Energy up by 0.53%, TECK up by 0.44% and Capital Goods was up by 0.39%, while Metal down by 1.91%, Basic Materials down by 0.65%, Healthcare down by 0.55%, FMCG down by 0.23% and Auto was down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 1.86%, Infosys up by 1.68%, Power Grid up by 1.18%, Reliance Industries up by 0.86% and IndusInd Bank was up by 0.60%. On the flip side, Sun Pharma down by 3.26%, Tata Steel down by 2.34%, Bajaj Auto down by 2.02%, Vedanta down by 1.97% and Hero MotoCorp was down by 1.56% were the top losers.

Meanwhile, with an aim to help Indian companies, the Reserve Bank of India (RBI) has relaxed norms for external commercial borrowings (ECBs). The RBI has reduced hedging requirements for external commercial borrowings (ECBs) to 70% from 100%.

The relaxed norms will apply to the ECBs with a maturity period between 3 and 5 years. The RBI also clarified that the ECBs raised prior to this circular will be required to mandatorily roll over their existing hedge only to the extent of 70% of outstanding ECB exposure.

The move will help Indian companies borrow funds relatively cheaply as hedging cost added up substantially to the final cost. This will also certainly help bring down the cost from overseas sources for India companies.

The CNX Nifty is currently trading at 10626.15, down by 2.45 points or 0.02% after trading in a range of 10596.35 and 10635.80. There were 22 stocks advancing against 27 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Yes Bank up by 1.89%, Infosys up by 1.75%, Bharti Infratel up by 1.48%, IndusInd Bank up by 1.03% and Reliance Industries was up by 0.96%. On the flip side, JSW Steel down by 3.95%, Sun Pharma down by 3.58%, Tata Steel down by 2.38%, Bajaj Auto down by 1.97% and Vedanta was down by 1.94% were the top losers.

Asian markets were trading mostly in green, Jakarta Composite surged 1.71 points or 0.03% to 6,024.49, Nikkei 225 gained 181.25 points or 0.82% to 21,993.25, Straits Times soared 6.05 points or 0.2% to 3,099.43, KOSPI increased 17.78 points or 0.85% to 2,100.80 and Shanghai Composite was up by 10.93 points or 0.42% to 2,586.74.

On the other hand, Hang Seng declined 3.00 points or 0.01% to 26,373.18 and Taiwan Weighted was down by 9.19 points or 0.09% to 9,756.17.