Indian markets extend losses; Metal, Healthcare stocks drag

Indian markets extended losses in the early noon session due to heavy selling in Metal, Healthcare and Basic Materials stocks. Profit booking by traders in frontline blue chip stocks such as Sun Pharma, Tata Steel and Hero MotoCorp among others added pressure on the stock markets. Weak rupee also dampened sentiments. Investors remained pessimistic with a report stating that India will not be able to narrow fiscal deficit to the targeted 3.3 per cent for 2018-19 of GDP on a shortfall in indirect taxes and non-tax revenues, despite repeated assurances. Some concerns came in on the street with SBI research report stating that the GDP growth in the September quarter is expected to decelerate to 7.5-7.6 per cent over the previous three-month period mainly due to slowdown in rural demand. However, buying in Realty, IT, TECK stocks kept a lid on the losses. Some relief came in with International Labour Organisation (ILO) report showing that India recorded the highest average real wage growth in South Asia during 2008-17. The report also showed that in South Asia, India led the average real wage growth in 2008-17 at 5.5 against a regional median of 3.7.

On the global front, Asian markets were trading mostly in green despite US President Donald Trump stating that he is likely to go ahead with raising tariffs on $200 billion in Chinese imports to 25 percent from the current 10 percent and threatened to slap tariffs on all remaining imports from the country if talks with Beijing over trade did not go well. Back home, Nifty PSU bank was trading in green with report that the government may infuse more capital into public sector banks to push credit flow into the economy.

The BSE Sensex is currently trading at 35324.17, down by 29.91 points or 0.08% after trading in a range of 35264.19 and 35424.27. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell by 0.06%, while Small cap index was up by 0.19%.

The top gaining sectoral indices on the BSE were Realty up by 1.15%, IT up by 0.68%, TECK up by 0.50%, Energy up by 0.49% and Power up by 0.47%, while Metal down by 2.18%, Healthcare down by 1.02%, Basic Materials down by 0.79%, Telecom down by 0.57% and FMCG down by 0.45% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.85%, Power Grid up by 1.46%, Reliance Industries up by 1.03%, Maruti Suzuki up by 0.61% and HDFC Bank up by 0.50%. On the flip side, Sun Pharma down by 5.52%, Tata Steel down by 2.76%, Bajaj Auto down by 2.32%, Hero MotoCorp down by 1.95% and Vedanta down by 1.74% were the top losers.

Meanwhile, just few days ahead of the release of second-quarter Gross Domestic Product (GDP) figures by the Central Statistics Office (CSO), State Bank of India (SBI) in its latest research report stated that GDP growth of India is expected to decelerate to 7.5-7.6% in the July-September quarter (Q2) of current fiscal year, over the previous three-month period. It said the growth will be dented mainly due to slowdown in rural demand. The GDP growth at constant prices (2011-12) was 8.2% in the First quarter of 2018-19.

The SBI Ecowrap report stated that the SBI Composite Leading Indicator (CLI), a basket of 21 leading indicators for September quarter of the current fiscal, is showing a marginal declining trend. Consequently, the headline second quarter Gross Value Added (GVA) growth could be 7.3-7.4%, due to the slowing of rural demand. It also believes that the growth numbers in the second quarter will be helped by a weak base in September quarter 2017-18.

Ecowrap estimate that the base impact on second quarter GVA growth is around 30 bps. Based on tax collections, it subsequently expects second quarter GDP growth at 7.5-7.6%. It further said commercial vehicle sales, domestic air passenger traffic and cement production have maintained double-digit growth during July-September quarter. All these indicators pushed up GVA in the quarter.

However, the monthly data of various indicators for October 2018 suggest the GVA growth is slowing down due to decline in demand. It also said of particular concern, is that non-food credit, bank deposits and sale of passenger and commercial vehicles have slowed down as compared to previous month. It added that with a slowdown in government spending in the second quarter, the fiscal impulses to growth would now be clearly missing.

The CNX Nifty is currently trading at 10612.40, down by 16.20 points or 0.15% after trading in a range of 10596.35 and 10641.40. There were 20 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.88%, Power Grid Corpn. up by 1.12%, Ultratech Cement up by 1.04%, Bajaj Finserv up by 1.01% and Reliance Industries up by 1.00%. On the flip side, Sun Pharma down by 5.57%, JSW Steel down by 4.74%, Tata Steel down by 2.72%, Hero MotoCorp down by 2.52% and Bajaj Auto down by 2.32% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 increased 140.40 points or 0.64% to 21,952.40, Jakarta Composite increased 1.71 points or 0.03% to 6,024.49, Straits Times increased 4.20 points or 0.14% to 3,097.58, KOSPI increased 15.76 points or 0.75% to 2,098.78 and Taiwan Weighted was up 13.26 points or 0.14% to 9,778.62. On the flip side, Hang Seng decreased 78.950 points or 0.3% to 26,297.23 and Shanghai Composite was down 0.16 points or 0.01% to 2,575.65.